Skip to content
RIMAIAgribusiness SchoolMy land

D-hedging Dictionary

Hedging

Locking in a price ahead of time to remove price risk

All termsIntroduced in Module 2Open the Toolkit
An open dictionary on a farm office desk
Plain meaning
Locking in a price ahead of time to remove price risk
How to use it
Use hedging to fix a price before harvest when the price is high enough to cover costs. It removes the downside and the upside together.
South African benchmark
Grain farmers hedge through SAFEX futures and options.
Country notes
Hedging through futures is mostly unavailable outside South Africa; forward contracts with buyers do the same job locally.
Go and read
C2 Lesson 2.4
Calculate it
No calculator; the term is applied in the venture plan narrative.
Library sources
LIB-A021, LIB-A132
See also
SAFEX, Stress test
Twelve-month cash flow showing money out before money in and the lowest cash pointTwelve months of cash: money out first, money in laterJFMAMJJASONDRed dot: the lowest cash point, the working capital you must fundMoney in (sales)Money out (inputs, labour, loan)Running cash balance
From Module 2, Money for the Farm, where this term is introduced.

Introduced in C2 Money for the Farm.