While widely used in grain, oilseed, and a handful of international crops, commodity exchange markets are rarely used in the specialty crop industry. With the growth and increasingly global nature of this industry, there are opportunities to develop new products tailored specifically to the risks facing specialty crop producers.
What can be hedged?
- Fuel costs
- Production input costs: fertilizers and pesticides
- Packaging costs
- Supply interruptions (weather, suppliers/growers going out of business)
- Interest rate risk
- Exchange rate risk
- Counterparty risk
- Transportation costs
- Market price and quantity
Custom solutions that are possible today
- Traditional insurance products
- Parametric insurance
- Composite hedging products tailored to a specific business, product line, or time of year