Against the Grain: Food Firms Hedge Costs

Food firms are continuing to do business in the old model, and have yet to lock in to the changes that will affect agriculture for the next 20 years. Certainly hedging against price increases is a valid strategy which won't change.  However it isn't the only or even the most important strategy that should be considered. The game of food procurement, processing and selling it as value...

With ever rising commodity costs food companies that have hedged their key commodity purchases with forward buying have done quite well over the last year.Several key manufacturers have announced that they have hedged their raw materials by forward buying 60-70% of their 2008 needs.Lost in the discussion has been the potential for commodity prices to go down in the latter half of 2008.