Growing concerns about wheat shortages worldwide are sending prices soaring, making it clear that agricultural prices have entered a new age of volatility that is increasingly influencing companies' earnings. One of the surprising factors driving this shift is the rising frequency of agricultural shocks, as the number of extreme weather events has tripled since 1980. (See chart, below.)
Food companies, ranging from processors to manufacturers to restaurants, need to better prepare for this new market reality. Oliver Wyman's report, "Separating the Wheat from the Chaff," describes five ways that companies can gain a competitive advantage by limiting the impact of volatile agricultural prices.
Source: Munich Re