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E3 Journal of Business Management and Economics

E3 Journal of Business Management and Economics Vol. 4 (7) pp. 166-172, July 2013; © E3 Journals; ISSN 2141-7482

Risk management of agricultural supply chain in China with weather compensatory contract

Haiyan Yi1 * , Yangzhen Li1
1 School of Transportation and Logistics, Southwest Jiaotong University, Chengdu, China
*Corresponding Author E-mail: yihaiyan427@163.com
Accepted 10 June 2013

Abstract

This paper is based on some situations in China that agricultural products are transported directly to distribution centers and / or super markets. The retailer supplies an additional weather compensatory contract to the farmer before the planting time, in which the compensatory parameters are designed according to the forecast of temperature of the forthcoming demanding season. Such kind of contract can induce farmer to plant more properly to meet the market demands and increase the farmer΄s profits at the same time control market risk. This contract also helps the retailer as well as the farmer to reduce their weather risks.

Keywords: Weather; Compensatory contract; Agricultural supply chain; Risk management

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