This research aims at procuring a model in transferring risk due to uncertainty (fluctuation) of commodity prices that constitutes raw materials of agroindustry. Thus, this research is expected to give advantage to farmers and agroindustrial entrepreneurs in Indonesia in facing commodity markets that are becoming more liberal. Commodities tried out in this research are fresh fruit bunches (FFB) of which the price refers to the CPO spot price at Malaysia Derivatives Exchange (MDEX). The risk transfer system that will be developed here takes advantage of financial markets to muffle risk at commodity level. Risk in the commodity market is transferred through a risktransfer instrument. It will provide accumulation of loss, gain or neutral during the certain period of time range. Formulation of this instrument is derived from the theory of geometrical Brownian random movement, as explained by Hull (2017). Formulation given is upper and lower limits of commoditys price in certain periods of time to come. When the price drops, reaching under lower limit, so loss will occur, and on the contrary, when the price rises, exceeding the upper limit, so gain will occur. Gain or loss does not occur if the price moves between lower and upper limits. This risk transfer instrument is packed in the form of securities of Collective Investment Contract (Mutual Funds). This contract hereinafter is called Risk Transfer Mutual Funds Contract (RT-MFC).

simulation, risk transfer, price stabilization

• Dr. Ir. I Gusti Agung Anom Yudistira, M.Si.

• Rinda Nariswari, S.Si., M.Si

• Suwarno, S.Si., M.Pd.

• Dr. Samsul Arifin, S.Si., M.Sc.