Market structure and supply chain strategies in the global agricultural commodity industry: a comparison between EU and USA

Abstract

Agriculture is peculiar among other industries because supply risk, either through weather or perishability, challenges vertical coordination between independent farmer suppliers and commodity buyers. Moreover, production of agricultural commodities is strictly focused in some regions while there are others who rely mainly on commodities imports. The objective of this study is to provide a comprehensive understanding of the commodity market structure and how its features impact the supply chain organisation and companies' strategies. Specifically, the main sources of risks relative to wheat, corn and soybean commodities markets are investigated and related to international trade and supply chain relationships. Furthermore, attention is given to strategies and capabilities that companies working in this market implement to hedge their risks. The evidence provided is based on the case studies of two intermediaries operating in the cereal supply chain, based in USA and Europe.