Specific risk management contracts are available and becoming more popular on farm. As growers scrutinise their cost of production and break even ratio, contracts that deliver a minimum price can be useful. These contracts protect against downward market movement but allow the grower to take advantage of the upside when the market moves.
Spot sellers will require a trading company with regional strength and a variety of outlets to ensure a price will always be available. Access to world markets is important, especially in times of volatility or uncertainty.
As a rule of thumb, an equal split between pool, supply chain and risk management contracts will give growers a fair opportunity to cover the cost of production without losing the chance to capitalise on an improving market.