Quarter Century of Daily Data Fuels UA Startup HedgeSmart Software

TUCSON, Ariz. – The University of Arizona has licensed a commodity price-risk management web application to Tucson startup company HedgeSmart LLC. Roger Dahlgran, Ph.D., (pictured right) Associate Professor of Agricultural and Resource Economics at the UA College of Agriculture and Life Sciences, created the system.

“If a producer or processor sees a current price that he/she would like to ‘lock in’, HedgeSmart shows how to do this based on historic relationships between cash and futures prices. The past may not exactly replicate itself so there is some risk,” says Dahlgran, “but HedgeSmart minimizes this risk.”

Underpinning the HedgeSmart web application is a database of daily futures and cash prices that Professor Dahlgran has compiled over the past 25 years. The system selectively queries, combines and analyzes this information to provide price-risk minimizing hedging recommendations. It offers each user flexibility in modeling business operations and planning and production horizons, as well as in selecting the futures contracts to be used for hedging.

According to experts, the greatest challenge facing agricultural producers in 2016 is commodity price volatility. HedgeSmart addresses this by helping farmers, agribusinesses, and brokers reduce commodity price risks while making timely decisions about purchasing inputs and marketing output.

“The kind of research needed to develop informed decisions is highly complex and can take a lot of time if done manually,” says Vivek Kumar, co-founder of the company and alumnus of the UA and the Eller College of Management. “HedgeSmart reduces that time to less than an hour and helps in automating the computation of hedge ratios for wide variety of hedging situations.”

According to Kumar, the core technology may have several more applications at the crossroads of big data and data-driven decision making.

Tech Launch Arizona (TLA), the office of the UA that commercializes inventions stemming from UA research, facilitated the process of defining, protecting and licensing the intellectual property in the web application, and also provided guidance in the formation of the company and ultimately licensed the web application to HedgeSmart.

“HedgeSmart is a great example of how Tech Launch Arizona can help UA faculty find ways to take their research and know-how and transfer it into a commercial product and company,” says Lewis Humphreys, IT Licensing Manager for TLA.

HedgeSmart has been invited to participate in the current NSF I-Corp grant program cohort. They will use the funding to further develop their business model and identify new customers.

The company is currently building its leadership team.

Want more news from TLA? Subscribe to our monthly enewsletter.