Strategies for coping with uncertainty: the adaptation of food chains to volatile markets

Abstract

The objective of this paper is to identify the strategies and instruments that agribusiness companies currently use to cope with the volatility of agricultural markets. This aim is achieved by means of presenting the empirical results of an online survey that was undertaken between April and August 2009 with the participation of 140 German agribusiness firms. The majority of respondents expect increasing volatilities and higher prices for agricultural produce. For managing this uncertainty, comparatively simple instruments such as long-term contracts with suppliers or customers are most widely used. But more elaborated instruments to hedge price risks will probably affect the food chain as a whole and will lead to food chain adaptations to volatile markets.