Agricultural Supply Chains and the Management of Price Risk
To Be Published December 15th 2013 by Routledge – 288 pages
Series: Earthscan Food and Agriculture
Price is the key linkage between buyers and sellers in a commodity supply chain, so that managing price risk is vital for the producers' survival. In this book the author shows that managing price risk for agricultural products is feasible and that price risk management strategies are therefore possible. The focus is on tactical considerations such as why, when, how and where, when considering managing price risk in agricultural supply chains.
The book also assesses other supply chain risks including the interchange of risk, rather than merely demonstrating hedging strategies. All agricultural products that are commodity-driven, including food, fibre, and energy-destined products, are covered. The emphasis is on storable commodities, but there is also one chapter on the problems associated with managing price risk for perishable products such as meat and dairy. The supply chain risks examined, but which are integrative with price risk for agricultural commodities include: currency, basis, production, supply, quality, delivery, freight, product specification, supplier, customer, organizational, financial, supply chain, contract default, settlement, margin, transactional, goodwill, and relationship-alliance risk.
1. Difficulties with Supply Chain Integration
2. The Reason for Forward Markets
3. Problems with Risk Management
4. Market Position and Valuation
5. Futures Hedging and Basis Risk
6. Options Hedging and Price Enhancement
7. Over-the-Counter Bank Pricing Products
8. Strategy Evaluation and Hedging Tactics
9. Storage, Pooling, Hoarding and Financing Issues
10. Currency Markets and Risk Management
11. Limitations in Managing Price Risk
12. Arbitrage and Spread Trades
John Williams is Executive Director, Australian Commodity Research Institute, and a Fellow in Agribusiness at the Centre for Study of Rural Australia, Marcus Oldham College, Geelong, Victoria, Australia. He is the author of "Competition and Efficiency in International Food Supply Chains" (Routledge, 2012).