Overview
The uncertainty of the future requires careful scenario planning. Advanced Monte Carlo simulation and structured scenario analyses stress-test strategies against realistic yet severe market conditions, such as geopolitical disruptions or macroeconomic downturns. These are systematically analyzed, providing clear quantitative outcomes like potential losses or cash-flow disruptions. Monte Carlo simulation often includes weather as a random factor, simulating crop yield and price outcomes to get a distribution of revenue for farmers or traders, helping structure crop insurance or decide hedging levels.
Scenario analysis in agriculture might include a major policy change impacting demand or a plant disease outbreak impacting feed demand. These scenarios test the supply chain, with food companies often doing "extreme shortage" scenarios to see if they can still source inputs.
Scenario analysis in agriculture might include a major policy change impacting demand or a plant disease outbreak impacting feed demand. These scenarios test the supply chain, with food companies often doing "extreme shortage" scenarios to see if they can still source inputs.