Do Australian woolgrowers manage price risk rationally?
AbstractAustralian woolgrowers have not adopted price risk management in the last decade. This is despite a concerted effort at various times by participants in the wool industry to encourage growers to use hedging/forward selling. The explanation for the reluctance of woolgrowers to use futures market and forward pricing instruments lies not in market failure but in characteristics of wool producing farm businesses. In particular, the degree of business and financial risk and the interaction between the two helps to explain why woolgrowers do not use futures. In the context of the whole farm system, Australian woolgrowers are behaving as rational managers of wool price risk.
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Bibliographic InfoArticle provided by Australasian Farm Business Management Network in its journal AFBM Journal.
Volume (Year): 03 (2006)
Issue (Month): 2 ()
price risk management; motivation for hedging; business risk; financial risk; Australian woolgrow; Farm Management;
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