Price risk management: We all do it
Nov. 5, 2026
By Mary Hightower
University of Arkansas Division of Agriculture
Fast Facts
- Mitchell: Managing risk is a daily activity
- Fryar Center analyzes, translates findings for ag sector decision-making
- Video: Managing risk in ag
(878 words)
DOWNLOAD related art of Nalley, McKenzie, Mitchell, Fryar Center logo
Newsrooms: With What is price risk management?
FAYETTEVILLE, Ark. — “Price risk management” may sound like some esoteric financial term, but it’s something we do every day.
The phrase is what defines the Fryar Price Risk Management Center of Excellence, part of the Dale Bumpers College of Agricultural, Food and Life Sciences and the University of Arkansas Division of Agriculture.
“Whether you’re in agriculture or not, you understand risk,” said Ed Fryar, a former professor of agricultural economics and agribusiness who went on to found Ozark Mountain Poultry. It was a $10 million donation from Fryar and his wife Michelle that brought the center to life.
“We all take risks every day,” said James Mitchell, associate director of the center with a focus on outreach.
“Think about something as simple as driving to the grocery store. We could get into a fender bender on the way. That's a quantifiable risk we take every time we get behind the wheel,” he said. “We manage that risk by having car insurance, wearing seatbelts, making sure our tires are filled, and checking that our blinkers work. None of those things eliminate the risk, but they help us manage it.”
Mitchell said price risk is no different.
“Think about buying groceries for Thanksgiving dinner,” he said. “Most of us won't wait until the day before Thanksgiving to buy everything. We plan ahead and watch for sales. We're managing the risk of having to pay higher prices or an item not being in stock.”
Pricing as communication
Understanding why and how prices move in agriculture is the underlying mission for the center.
Agriculture is seeing its most turbulent time since the 1980s with farmers being crushed between low commodity prices and increasing prices for essentials such as diesel and fertilizer.
“Price risk management is particularly important in agriculture because it's such a decentralized industry,” Mitchell said. “Producers, processors and consumers make decisions every day without communicating with each other directly.
“Prices are the primary way these individuals communicate their preferences and production decisions to one another,” he said.
In farming, price risk management is critical.
“Commodity prices are extremely volatile,” said Andrew McKenzie, associate director and Fryar endowed professor in risk management. “They're always going to be spiking up and spiking down.
“If you don't manage that risk, then you're in a bad situation,” he said.
“The challenge for farmers is that they often have to make production decisions months or even years before knowing what price they'll receive,” Mitchell said. “Price risk management gives them a way to manage that rather than simply hoping prices work in their favor.”
Risk management expertise
Prices can be moved by global factors such as war, severe weather and diseases. Fryar Center staff look deeper, studying factors including transportation disruptions like waterway closures, risk management tactics such as crop insurance, and trading futures and options.
The Fryar Center’s land-grant economists are uniquely equipped to conduct sector-critical research and translate it into actionable recommendations to help farmers and others in the ag industry sharpen decision making for favorable outcomes, McKenzie said.
“Most faculties across the country in ag econ might have one person who's the futures market expert. We have three excellent ones on staff,” said Lanier Nalley, center director and head of the agricultural economics and agribusiness department. “They all specialize in three different aspects of risk. To have them under the umbrella of the Fryar Center working as a team — that is a multiplier that I can't calculate.”
The Fryar Center’s lineup of faculty experts includes:
- Lanier Nalley, director and head of the agricultural economics and agribusiness department. Nalley’s current research emphasis is on rice production, climate challenges, the economics of plant genetics, and international development.
- Andrew McKenzie, associate director and Fryar endowed professor in risk management. McKenzie is an internationally recognized expert in commodity futures markets. His research has focused on price discovery and the reaction of futures prices to the release of government reports.
- James Mitchell, associate director focused on Center extension, or outreach, and assistant professor. Mitchell leads integrated extension and research programs that address issues that span the livestock and meat supply chain. His extension programming primarily focuses on livestock marketing and risk management.
- Eunchun Park, assistant professor of risk analysis and management. Park’s research interests include econometrics and agricultural risk analysis, including crop insurance and commodity futures and options market.
- Ryan Loy, assistant professor and extension economist. He serves producers by providing education and research on relevant farm financial management topics. Loy’s research interests include agricultural finance, farm management, supply chain resilience, and value-added marketing channels.
- Hunter Biram, assistant professor and crop extension economist. Biram’s research focuses primarily on risk management and agricultural policy program evaluation using causal inference and applied econometrics with an emphasis on crop insurance. Biram’s work focuses on the impacts of crop insurance participation on producer behavior and uncovering drivers of premium rate heterogeneity.
The staff also includes two instructors who are grain merchandising specialists: Roger
Gattis and Jason Wheeler.
“We can solve bigger, more wicked problems by expanding our willingness to work across
disciplines,” Nalley said. “To have the holistic cycle of risk from planting the seed
to growing it, to selling it, to buying it, processing it…I think we have the expertise
to really make our name nationally and internationally.”
About the Fryar Center
Established in 2020 through a generous gift from Dr. Ed and Michelle Fryar, the Fryar Price Risk Management Center of Excellence is housed within the Department of Agricultural Economics and Agribusiness at the University of Arkansas.
The Center advances the University's land-grant mission through research, teaching, and outreach focused on critical risk-management challenges facing agriculture and the broader food and fiber system. While the Center places particular emphasis on industries important to Arkansas agriculture, its faculty and programs address risk-management questions with national and global relevance.
About the Dale Bumpers College of Agricultural, Food and Life Sciences: Bumpers College provides life-changing opportunities to position and prepare graduates who will be leaders in the businesses associated with foods, family, the environment, agriculture, sustainability and human quality of life; and who will be first-choice candidates of employers looking for leaders, innovators, policy makers and entrepreneurs. The college is named for Dale Bumpers, former Arkansas governor and longtime U.S. senator who made the state prominent in national and international agriculture. For more information about Bumpers College, visit our website, and follow us on X at @BumpersCollege and Instagram at Bumpers College.
About UADA
The University of Arkansas Division of Agriculture’s mission is to strengthen agriculture, communities, and families by connecting trusted research to the adoption of best practices. Through the Agricultural Experiment Station and the Cooperative Extension Service, UADA conducts research and extension work within the nation’s historic land grant education system.
UADA is one of 22 entities within the University of Arkansas System. It has offices in all 75 counties in Arkansas and faculty on three university campuses.
Pursuant to 7 CFR § 15.3, UADA offers all its Extension and Research programs and services (including employment) without regard to race, color, sex, national origin, religion, age, disability, marital or veteran status, genetic information, sexual preference, pregnancy or any other legally protected status, and is an equal opportunity institution.
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Media contact
Mary Hightower
mhightower@uada.edu