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

Long term negotiated contracts, as well as being large enough to generate their own little gravity field in a supply and demand market. If Cargill or Tyson aren’t making money butchering because the prices aren’t high enough, they’ll slow production, which then reduces supply, and prices will eventually go back up. They also do a lot of work to anticipate the market to avoid being caught off guard.