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:
/dk/atira/pure/subjectarea/aacsb/disciplinebasedresearch
Subjects:
ID Code:
48753
Deposited By:
Deposited On:
11 Jul 2011 21:10
Refereed?:
No
Published?:
Published
Last Modified:
03 Jul 2020 06:57