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

They have a lot of buying power. McDonald’s isn’t buying 10lbs of potatoes, they’re buying them in the millions of pounds. Farms exist solely to provide them their food. So if someone raises prices on them, they could take their business elsewhere and basically ruin that company.