Risk management in feed costs : development of a financial product to hedge the price changes of compound feed products for livestock farmers

The increase in fluctuation in the feed prices for livestock farmers motivated ABN AMRO Bank N.V. to research the possibility to develop a new risk management tool. For the Farmers, feed costs represent 50% to 65% of the total costs. A new tool for compound feed will give the farmer the opportunity to hedge the risks of price changes. Several possibilities for a new product are researched, giving three concrete options. (Original management summary excluded from public version)