This website uses cookies to ensure you have the best experience. Learn more

Managing Weather Risk In Seed Business

1645 words - 7 pages

Managing Weather Risk in Seed Business Weather Risks of a Seed Company Weather risk for a seed company is the risk of drop in sales volume on account of adverse weather conditions like excess / deficit in rainfall, extreme temperature and humidity conditions etc. Indian agriculture is predominantly dependent upon monsoon rains, with more than 60% of cultivated area in Kharif being rainfed. This rainfed nature of Indian agriculture makes the business of agri-input company completely dependent upon weather. Very often seed companies find themselves holding large unsold stock because of adverse weather conditions like insufficient or untimely rainfall. Seed companies also find it difficult to ...view middle of the document...

Weather Risk – Basis and Response Most of the agri-input companies have not developed adequate tools to identify, evaluate, monitor and manage the weather risks in their businesses. These companies have very ad hoc weather risk identification and response mechanism which is based on experienced of field-level staff. This guess estimation process delays the information flow to the top management inhibiting any corrective logistical measures central management team could have taken to minimize and avoid losses. Table below shows the response mechanism generally adopted by companies for weather risks of varying magnitude. The table also suggests solutions / changes in existing response mechanism in form a more scientific approach towards management of weather risks.
Particulars Low Risk Event • Very Localized Event • Impacts one or two districts • Diffcult to predict • Minor logistical changes involving movement of goods to nearby districts having sustained demand • Guess-estimates and post happening of events • Delayed response because of nonavailability of data and vague understanding of weather impact • Not Significant Moderate Risk Event • Wider Geographical Spread covering agroclimatic zone or state Can be predicted • Requires more intense planning involving moving goods from weather hit locations to states with sustained demand. • Guess-estimates and post happening of events • Delayed response because of nonavailability of data and vague understanding of weather impact • May result in sales losses at aggregate level • More accurate understanding of impact of weather. • Flexible alternative plan which responds to current and forecasted weather • May result in sales losses at aggregate level High Risk Event • Multi-state event with high severity and impact. Like 2002 drought • Pushing sales at irrigated regions or in next season

Nature

General Response Basis of response

The Problem Financial Impact

• Guess-estimates and post happening of events • Any response won't work, since the weather event is clamitic and wide spread • May result in Net Loss / depletion in shareholders' weather • Risk transfer at a cost that is lower than the cost of assuming the risk. • Buying Weather Insurance / Options • May result in Net Loss / depletion in shareholders' weather

Solution Financial Impact

Managing Weather Risks Process of managing the volumetric risks related to weather starts with identification of the risks and culminates with transferring the risk which seed company deems costly keep in its own books. The process is outlined below:

a. Identification of the Risk: This involves obtaining the fortnightly or monthly sales data of the company for each of the locations for last several years. The data pertaining to crop, soil type of each location / region, general weather condition is also obtained and analyzed. Scientific models are then built, based on correlation of individual and aggregate impact of each weather parameter on...

Other Papers Like Managing Weather Risk in Seed Business

Agricultural Risk Essay

988 words - 4 pages , sharecropping, investing in semiliquid assets such as livestock or buffer stocks, farmer self-help groups, and loans from moneylenders. 2. Markets create mechanisms to help farm households manage weather risks, including new technology; improved seed varieties; formal financial services, including savings, lending, and insurance; risk-sharing arrangements with input suppliers and wholesalers; and information technology tools. 3. Governments make

Risk Management Essay

1196 words - 5 pages are assigned appropriate risk responsibility. Consultants are utilized to better manage risk Common Risks The following are some areas that commonly create risk. • The weather is a risk in itself due to the potential destruction it can cause. It is that the company cannot do anything to avert the potential damage it can bring • Legislation can be changed at any time, which could adversely impact a business' practices, productivity and

Enron's Weather Derivatives

873 words - 4 pages sensitive to the weather. The US Department of Commerce estimated that at least $1 trillion of the total US GNP (~ 7 trillion) is sensitive to various in weather. Enron’s power companies’ believe that “weather risk is the biggest independent variable in the power business” 4- How should Mary Watts proceed to assess, and decide upon, the use of weather protection for PNW? What criteria should she use to make her decision? Mary should

Project Risk Management

1020 words - 5 pages Test & acceptance | Time constraint on construction changes could cost more. | Yes | | | MANAGEMENT RISK | 2.1 Organization | Lack of good management | Yes | | | | 2.2 Resourcing | No trained management expertise, Enron and central management are incompetent. | Yes | | | | | Lack of business experts in management | Maybe | | | | | Financial managers | Yes | | | | | Local contractors no involved. | Yes

Gallen V. Butterley

575 words - 3 pages should not market or advertise their products or services with unsupported statements or claims that are not factual. This can expose the company to lawsuits as in the case of Gallen v. Butterley. * Business risk management: Businesses should formulate specialized or customised contracts with other parties that explicitly state all clauses in written form. Customers/vendors should be asked to review contracts before signing it. By doing this

Credit Risk Analysis in Standard Charter Bank

562 words - 3 pages Best Practice in Risk Management in Banks A Two-day Practical Workshop The Workshop Objective: Bank managers will understand how risks are identified, quantified in terms of their impact on earnings, monitored and managed within banks. Program participants will become better equipped to: • • • Identify and quantify the bank’s vulnerability to credit, market, liquidity, operational, regulatory and reputational risks. Understand and learn best

Information Technology

1710 words - 7 pages concerns. Readings Read Ch. 1, “Overview of Electronic Commerce”, of Electronic Commerce: Security, Risk Management, and Control. Read Ch. 2, “Electronization of Business”, of Electronic Commerce: Security, Risk Management, and Control. Read Ch. 1, “Introduction to Project Risk Management”, of Project Risk Management Guidelines: Managing Risk in Large Projects and Complex Procurements. Read Ch. 8, “Communication and Reporting”, of

Dalman And Lei Unit 2

651 words - 3 pages Sociotechnical Systems Theory, Quantitative Management, Organizations Theory, and System Theory approaches and Macro, Internal, and Competitive environments all have their place and relevance to managing a business. Some are more helpful than others and can be a great asset to building a business and some seem to lack importance or stability. Which ones are best for certain situation depends on what business a person is in and what position they

Bẳng Doanh Thu Của Syngenta

1713 words - 7 pages CP consumption ● Strong second season corn in Brazil ● Enhanced corn seed portfolio Growth at constant exchange rates Asia Pacific: -1% ● Range rationalization ● Cold wet weather in Australia ● Strong growth in China, South East Asia 4 Integrated strategy gaining momentum  Commercial teams fully integrated across all territories  Positive grower and channel response  Integrated R&D structure driving crop-based pipelines

Business Administration

1029 words - 5 pages business for growth and/or stability of that business. In other words, it’s the very heart of a business. You might ask yourself “what is business administration?” It’s ok; I asked myself that same question when starting my quest to own and manage my own business. Business Administration is the process of managing EVERY aspect of a business in order for it to maintain its growth or stability, depending on the overall goal of the owner or owners

Source of Found

1583 words - 7 pages venture capitalists do by providing the fund usually ranged between $10,000 and $2 million(Bygrave,.,and Reynolds,2004)Angles invest in seed-stage and very early-stage companies that are not yet mature enough for formal venture capital or companies that need financing in amounts too small to justify the venture capitalist’s costs, including evaluation, due diligence, and legal fees. 连! Business in their starting phase.(Gupta,1995。). times. 24

Related Essays

Managing Risk In An Unstable World

867 words - 4 pages Risk Index (GPRI). How are GPRI countries selected? Selection of countries for the index is based upon economic relevance for the international markets in equities, debt, or foreign direct investment (FDI). When are scores updated and published? The scoring process each month is completed by the end of the third week of the month and is published on the first business day of the subsequent month, along with forward-looking analysis of

Assessing And Managing Legal Risks In Business

1349 words - 6 pages Assessing and Managing Legal Risks in Business To run a profitable and successful business the issues of liability, litigation and legal risks need to be assessed on a regular basis. By doing so companies can increase their bottom line, maintain a positive reputation and be prepared if and when issue arises. United States based Alumina, Inc. a $4 billion dollar company. Its business interests include automotive components

Sources Of Risk In Global Business

799 words - 4 pages following points) Maunuj argues that the risks associated with global supply chains are both political and economic. In Managing Political Risk in Global Business, Jones and Lubinski provide the history of political risk in global business, dating as far back as World War II. An example of “cloaking” by German companies is used to illustrate political risk in its early years. Sourcing in global health supply chains for developing countries

Managing Risk In Information Systems Chapter 4 Key Terms / Assessment

875 words - 4 pages . Firewall policy - A document that identifies what traffic to allow or block. A firewall policy is often used to implement rules on the firewall. Gantt chart - A bar chart used to show a project schedule. Gantt charts are commonly used in project management. Gantt charts can be used in risk management plans. Milestone - A scheduled event for a project. It indicates the completion of a major task or group of tasks. Milestones are used to track