Seafood price riSk commodity riSk notes to the Consolidated Financial Statements (cont’d) The Company is dependent upon the procurement of frozen raw seafood materials and finished goods on world markets. The  Company buys as much as $600 million of this product annually. A 1% change in the price of frozen raw seafood materials would  increase/decrease the Company’s procurement costs by $6 million. Prices can fluctuate and there is no formal commercial  mechanism for hedging either sales or purchases. Purchases of seafood on global markets are principally in U.S. dollars. We hedge  exposures to currency changes, and we enter into longer-term supply contracts when possible. All foreign currency hedging activities  are carried out in accordance with our formal Price  Risk Management Policy , under the oversight of the Audit Committee.  The Company has multiple strategies to manage seafood costs. Wherever possible, the Company minimizes the percentage of seafood  that is being supplied by a single source and tries to have at least two suppliers for our seafood product purchases. The Company focuses on the development of close relationships with key suppliers. The Company currently purchases significant  quantities of frozen raw material and finished goods originating from all over the world. The Company’s supplier base is diverse to  ensure no over-reliance on any one source or species. The Company maintains a strict policy of  Supplier Approval and Audit Standards.  Also as part of the Company’s strategy to ensure continuity of supply of seafood at the lowest possible cost, the Company established  a joint venture with a European raw material supplier (as defined in  note 7 ). The joint venture, along with an Asian company,  established a processing facility in China and began operations in 2010. This facility processes products from raw material primarily  sourced from our European joint venture partner and sold either to us, or to our joint venture partner. As part of the Icelandic USA  Acquisition, the Company now owns a primary processing facility in China in addition to its joint venture. This assists the Company  on ensuring continuity of supply for its operations. The Company’s operating costs are affected by changes in crude oil prices, which particularly influence the costs of outgoing freight. Higher crude oil prices increase freight costs as freight suppliers add fuel surcharges. To manage this risk, in accordance with the Company’s  Price Risk Management Policy,  the Company can enter into costless collar hedges but has not done so in the last four years.  Other commodities, whose fluctuating market prices may affect financial results, are flour, paper products and frying oils. The  Company’s  Price Risk Management Policy  dictates the use of fixed pricing with suppliers whenever possible but allows the use of  hedging with costless tunnels or swaps if deemed prudent. Throughout 2011 and 2010 the Company has managed this risk through  contracts with our suppliers. World commodity prices for flour, soy and canola oils, (important ingredients in the manufacture of  many of the Company’s products) increased in 2011 after the decreases seen in 2010. The Company currently has fixed price contracts  with suppliers, covering a significant portion of the Company’s 2012 commodity purchase requirements.  101 AnnuAl RepoRt 2011