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Futures for farmers: hedging participation and the Mexican corn scheme

Benavides, G and Snowden, P N (2005) Futures for farmers: hedging participation and the Mexican corn scheme. Working Paper. The Department of Economics, Lancaster University.

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    Abstract

    Administered commodity price schemes in developing countries have proved ineffective in raising farmers’ incomes and price stabilisation through futures markets is increasingly advocated as the alternative policy objective. A potential difficulty is that farmers tend not to hedge extensively, even in developed countries where access to futures markets is long established. Explanations for this reticence are examined here with context provided by the Mexican hedging programme, which incorporates financial incentives to spur adoption. Applying representative data for corn to a well-known analysis of the hedging decision suggests that limited participation may reflect rational calculation rather than farmer ‘inertia’. A policy implication is that permanent access subsidies are difficult to justify from the national perspective.

    Item Type: Monograph (Working Paper)
    Uncontrolled Keywords: farmers ; hedging incentives ; subsidies ; Mexico
    Subjects: UNSPECIFIED
    Departments: Lancaster University Management School > Economics
    ID Code: 48753
    Deposited By: ep_importer_pure
    Deposited On: 11 Jul 2011 22:10
    Refereed?: No
    Published?: Published
    Last Modified: 17 Sep 2013 18:26
    Identification Number:
    URI: http://eprints.lancs.ac.uk/id/eprint/48753

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