Risks Balancing Model of Agri-supply Chain Using Fuzzy Risks Utility Regression

Farmers as the earliest stage in supply chain networks are usually weak and have no bargaining power in commodities pricing, because the commodities availability depends on season and has a very high potential for damage before be processed into specific products. So the price of agricultural commodities has a very high risk of fluctuations compared to the price of a finished product. As the farming profession becomes less attractive to farmers engaged in that could threaten the supply of agricultural products as raw materials for industry and national food security. Therefore it is necessary to develop a fairly commodities pricing mechanism to encourage more farmers so that the supply of agricultural products can be sustained. One method to formulate a fair pricing mechanism for farmers is utility risk balancing. This paper will explain a pricing model at farm level by consensus using stakeholder dialogue approach which is based on balancing the fuzzy risk utility preference that will be faced by all levels of the supply chain members. Fuzzy risk utility optimization was used to get consensus of supply chain stakeholder dialogue while basic risk utility function was derived by using fuzzy regression approach. The model is validated in the corn supply chain management to determine the corn price at farmer level using the risk constraints of each stakeholder.