ALICO, INC. 10-K

Item 7A. Quantitative and Qualitative Disclosures about Market Risk Market Risk – Market risk represents the potential loss resulting from adverse changes in the value of financial instruments, either derivative or non-derivative, caused by fluctuations in interest rates, foreign exchange rates, commodity prices, and equity security prices. We handle market risks in accordance with our established policies; however, we do not enter into derivatives or other financial instruments for trading or speculative purposes. We do consider, on occasion, the need to enter into financial instruments to manage and reduce the impact of changes in interest rates; however, we entered into no such instruments during the fiscal year ended September 30, 2023. We held various financial instruments as of September 30, 2023 and 2022, consisting of financial assets and liabilities reported in our Consolidated Balance Sheets and off-balance sheet exposures resulting from letters of credit issued for our benefit. Interest Rate Risk – We are subject to interest rate risk from the utilization of financial instruments such as term loan debt and other borrowings. Our primary long-term obligations are fixed rate debts subject to fair value risk due to interest rate fluctuations. We are also subject to interest rate risk on our variable rate debt. A one-percentage-point increase in prevailing interest rates would have increased interest expense on our variable rate debt obligations by approximately $438 thousand for the year ended September 30, 2023. Foreign-Exchange Rate Risk – We currently have no exposure to foreign-exchange rate risk because all of our financial transactions are denominated in U.S. dollars. Commodity Price Risk – We have no financial instruments subject to commodity price risk. Equity Security Price Risk – None of our financial instruments have potential exposure to equity security price risk.