What is an offtake agreement?

An offtake agreement is a contractual agreement between a producer or supplier of goods or services and a buyer, in which the buyer agrees to purchase the products or services from the producer for a set period of time, at a specified price and quantity. These types of agreements are common in industries such as energy, mining, and agriculture, where the producer needs a guaranteed market for their products and the buyer wants a reliable supply. Offtake agreements also help reduce financial risks for both parties, as the producer is ensured a steady income and the buyer is protected against market fluctuations.