Futures for farmers: Hedging participation and the Mexican corn scheme
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 reluctance 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.
Year of publication: |
2006
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Authors: | Benavides, G. ; Snowden, P. N. |
Published in: |
Journal of Development Studies. - Taylor & Francis Journals, ISSN 0022-0388. - Vol. 42.2006, 4, p. 698-712
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Publisher: |
Taylor & Francis Journals |
Saved in:
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