how huge food companies like Cargill and Mcdonald’s, etc. protect themselves from extreme price changes.
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When you buy five potatoes you go to the store.
When you buy five hundred million potatoes you have to hire a bunch of farming and transportation and warehousing companies to produce and deliver the produce over a period of many years.
The potatoes being delivered today weren’t paid for yesterday, they were paid for months or even years ago.
All these long-term contracts help insulate the company from short term price shocks.
Eventually it will catch up when it’s time to renegotiate. Even then McDonalds can still get a much better deal than you because they’re guaranteeing large volumes for a set time period.
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