The contracts I’m describing are just long term contracts. Buyer and seller negotiate a long term price, and that’s the market price on that timeframe, no government involvement. Sometimes the spot price moves up or down, but the contract price is stable. It’s like buying a futures contract and just taking delivery regardless of how much the price moves: you paid a single price a long time ago, and all the fluctuation in the meantime doesn’t affect the price you actually paid for the right to take delivery.
It’s a subsidy when the state ends up paying the difference between the guaranteed price and the average market price.
The contracts I’m describing are just long term contracts. Buyer and seller negotiate a long term price, and that’s the market price on that timeframe, no government involvement. Sometimes the spot price moves up or down, but the contract price is stable. It’s like buying a futures contract and just taking delivery regardless of how much the price moves: you paid a single price a long time ago, and all the fluctuation in the meantime doesn’t affect the price you actually paid for the right to take delivery.