Research On Hedging Strategies In Agricultural Supply Chains

With the continuous development of economic globalization,the factors influencing the prices of agricultural products are increasing,which leads to the expansion of agricultural price risks and thus affects the stable development of agriculture.In order to manage the price risk of agricultural products,the function of hedging to hedge the risk is gradually being widely used by enterprises.Although hedging can hedge the price risk of agricultural products,whether it is beneficial to the enterprise depends on different market conditions.In addition,the hedging behavior of the members of the agricultural supply chain can affect each other,which poses a challenge to the hedging decision of the related enterprises.For this reason,it is necessary to study the optimal hedging strategies for agricultural supply chains in different market environments from a supply chain perspective.In this paper,we use game theory to construct hedging decision models for manufacturers and suppliers in three different scenarios,including no-competition environment,supplier competition and manufacturer competition.The study finds that raw material futures prices and price risks affect the optimal hedging strategy selection of the firms.Specifically,(1)in general,for supplier,manufacturer and agricultural supply chain,when futures prices are low and risks are low,the hedging strategy of manufacturer and supplier is optimal;when futures prices are high or risks are high,the non-hedging strategy of both manufacturer and supplier is optimal.(2)Only in an agricultural supply chain where manufacturers compete,when risk is high or futures prices are high,it is most advantageous for the manufacturer that does not hedge for the other manufacturer to participate in hedging.(3)In a non-competitive agricultural supply chain,the manufacturer’s optimal expected profit is the same under the manufacturer and supplier hedging strategy and the supplier hedging strategy,and the supplier’s optimal expected profit is the same under both the manufacturer and supplier non-hedging strategy and the manufacturer hedging strategy.This paper innovatively incorporates hedging into the study of agricultural supply chain game,puts forward the problem of hedging strategy selection in agricultural supply chain,and considers the impact of enterprise hedging on supply chain decision making at the same time,which makes this study more in line with the needs of theoretical and practical development,and therefore has important theoretical and practical significance.