how huge food companies like Cargill and Mcdonald’s, etc. protect themselves from extreme price changes.

Question

how huge food companies like Cargill and Mcdonald’s, etc. protect themselves from extreme price changes.

In: 858

Answer 1

contracts. They have an agreement with “meat company” to buy X lbs (just throwing a number out) at Y/pound for Z years. This contract give them the meat they are buying at the same price no matter what.