(1) Marketing Practices to Reduce The Risk of Price Fluctuation

This set of flashcards covers key concepts related to agricultural marketing practices and risk management.

Risk in agriculture

A situation where possible outcomes are known and can be measured, such as production risks like bad weather.

Uncertainty in agriculture

A situation where the outcomes or their probabilities are unknown, exemplified by unpredictable events like the Covid-19 pandemic.

Production risk

The risk related to agricultural production that can affect yield, such as bad weather or disease.

Price and Market Risk

The variability in prices of agricultural commodities, influenced by factors such as supply and demand.

Financial Risk

The risk related to financial issues such as interest rate changes and cash flow for debt payments.

Legal Risk

The risk stemming from changes in regulations related to agriculture, such as those on antibiotics or pesticides.

Market Utility

The added value that occurs as products change ownership and undergo further processing.

Farm Level price

The price of raw agricultural products before they are processed, which can fluctuate due to factors like regional supply and demand.

Market Price Risk

The risk that price variations will occur from the time of planting until the selling of agricultural products.

Risk management tools

Strategies used to mitigate the risk of adverse price changes in agriculture, including forward contracting and hedging.

Personal Risk

The risk that arises from individual decisions and actions that affect personal finances, such as market fluctuations or operational liabilities.

Agricultural Marketing

The performance of all business activities involved in the forward flow of goods and services from producers to consumers

When supplies are high

Prices tend to decrease

When demand is high

Prices tend to increase