Do Futures Benefit Farmers?
AbstractSimulations are used to analyze welfare and market- and farm-level effects of making futures available to producers of a storable commodity. Key features of the model are the explicit consideration of dynamic impacts due to inventories, and of aggregate market effects associated with futures adoption by some producers. Application to the natural rubber market shows that futures availability can lead to sizable market- and farm-level effects. Futures availability enhances consumer welfare, reduces nonadopter welfare, and yields important welfare gains for adopters when their market share is small and welfare losses when they account for a sufficiently large market share. Copyright 2009, Oxford University Press.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Bibliographic InfoArticle provided by Agricultural and Applied Economics Association in its journal American Journal of Agricultural Economics.
Volume (Year): 91 (2009)
Issue (Month): 1 ()
Contact details of provider:
Postal: 555 East Wells Street, Suite 1100, Milwaukee, Wisconsin 53202
Phone: (414) 918-3190
Fax: (414) 276-3349
Web page: http://www.aaea.org/
More information through EDIRC
Other versions of this item:
- C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
- G13 - Financial Economics - - General Financial Markets - - - Contingent Pricing; Futures Pricing
- Q11 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Aggregate Supply and Demand Analysis; Prices
- Q13 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Markets and Marketing; Cooperatives; Agribusiness
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Williams,Jeffrey C. & Wright,Brian D., 1991.
"Storage and Commodity Markets,"
Cambridge University Press, number 9780521326162, October.
- Narayana R. Kocherlakota, 1995.
"The equity premium: it's still a puzzle,"
Discussion Paper / Institute for Empirical Macroeconomics
102, Federal Reserve Bank of Minneapolis.
- Newbery, David M, 1989. "The Theory of Food Price Stabilisation," Economic Journal, Royal Economic Society, vol. 99(398), pages 1065-82, December.
- Zant, Wouter, 2001. "Hedging Price Risks of Farmers by Commodity Boards: A Simulation Applied to the Indian Natural Rubber Market," World Development, Elsevier, vol. 29(4), pages 691-710, April.
- Williams, Jeffrey C., 2001. "Commodity futures and options," Handbook of Agricultural Economics, in: B. L. Gardner & G. C. Rausser (ed.), Handbook of Agricultural Economics, edition 1, volume 1, chapter 13, pages 745-816 Elsevier.
- Sergio H. Lence & Dermot J. Hayes, 2000.
"U.S. Farm Policy and the Variability of Commodity Prices and Farm Revenues,"
Food and Agricultural Policy Research Institute (FAPRI) Publications
00-wp239, Food and Agricultural Policy Research Institute (FAPRI) at Iowa State University.
- Sergio H. Lence & Dermot J. Hayes, 2002. "U.S. Farm Policy and the Volatility of Commodity Prices and Farm Revenues," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 84(2), pages 335-351.
- Lence, Sergio H. & Hayes, Dermot J., 2002. "U.S. Farm Policy and the Volatility of Commodity Prices and Farm Revenue," Staff General Research Papers 1779, Iowa State University, Department of Economics.
- Sergio H. Lence & Dermot J. Hayes, 2000. "U.S. Farm Policy and the Variability of Commodity Prices and Farm Revenues," Center for Agricultural and Rural Development (CARD) Publications 00-wp239, Center for Agricultural and Rural Development (CARD) at Iowa State University.
- Lence, Sergio H. & Hayes, Dermot J., 2000. "U.S. Farm Policy And The Variability Of Commodity Prices And Farm Revenues," 2000 Conference, April 17-18 2000, Chicago, Illinois 18937, NCR-134 Conference on Applied Commodity Price Analysis, Forecasting, and Market Risk Management.
- Lence, Sergio H. & Hayes, Dermot J., 2000. "U.S. Farm Policy and the Variability of Commodity Prices and Farm Revenues," Staff General Research Papers 1968, Iowa State University, Department of Economics.
- Kawai, Masahiro, 1983. "Spot and Futures Prices of Nonsotrable Commodities under Rational Expectations," The Quarterly Journal of Economics, MIT Press, vol. 98(2), pages 235-54, May.
- Christian Gollier, 2004. "The Economics of Risk and Time," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262572249, June.
- Turnovsky, Stephen J, 1983. "The Determination of Spot and Futures Prices with Storable Commodities," Econometrica, Econometric Society, vol. 51(5), pages 1363-87, September.
- Lucas, Robert Jr, 1976. "Econometric policy evaluation: A critique," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 1(1), pages 19-46, January.
- Deaton, A. & Laroque, G., 1996.
"Competitive storage and commodity price dynamics,"
Open Access publications from University College London
http://discovery.ucl.ac.u, University College London.
- Turnovsky, Stephen J & Campbell, Robert B, 1985. "The Stabilizing and Welfare Properties of Futures Markets: A Simulation Approach," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 26(2), pages 277-303, June.
- Roy Bailey and Marcus Chambers, .
"A Theory of Commodity Price Fluctuations,"
Economics Discussion Papers
432, University of Essex, Department of Economics.
- Britto, Ronald, 1984. "The Simultaneous Determination of Spot and Futures Prices in a Simple Model with Production Risk," The Quarterly Journal of Economics, MIT Press, vol. 99(2), pages 351-65, May.
- Geweke, John, 1988. "Antithetic acceleration of Monte Carlo integration in Bayesian inference," Journal of Econometrics, Elsevier, vol. 38(1-2), pages 73-89.
- Gouel, Christophe, 2013.
"Food price volatility and domestic stabilization policies in developing countries,"
Policy Research Working Paper Series
6393, The World Bank.
- Christophe Gouel, 2013. "Food Price Volatility and Domestic Stabilization Policies in Developing Countries," NBER Chapters, in: The Economics of Food Price Volatility National Bureau of Economic Research, Inc.
- Christophe Gouel, 2013. "Food Price Volatility and Domestic Stabilization Policies in Developing Countries," NBER Working Papers 18934, National Bureau of Economic Research, Inc.
- Revoredo-Giha, Cesar & Zuppiroli, Marco, 2012.
"Effectiveness of hedging within the high price volatility context,"
142546, Scotland's Rural College (formerly Scottish Agricultural College), Land Economy & Environment Research Group.
- Revoredo-Giha, Cesar & Zuppiroli, Marco, 2012. "Effectiveness of hedging within the high price volatility context," Working Papers 142546, Scottish Agricultural College, Land Economy Research Group.
- Gohin, Alexandre & Rault, Arnaud, 2012. "Assessing the economic costs of an outbreak of Foot and Mouth Disease on Brittany: A dynamic computable general equilibrium," 86th Annual Conference, April 16-18, 2012, Warwick University, Coventry, UK 134712, Agricultural Economics Society.
- Revoredo-Giha, C. & Zuppiroli, M., 2013. "Commodity futures markets: are they an effective price risk management tool for the European wheat supply chain ?," 2013 Second Congress, June 6-7, 2013, Parma, Italy 149773, Italian Association of Agricultural and Applied Economics (AIEAA).
- Gohin, Alexandre & Rault, Arnaud, 2012. "Assessing the economic costs of an outbreak of Foot and Mouth Disease on Brittany: A dynamic computable general equilibrium approach," 123rd Seminar, February 23-24, 2012, Dublin, Ireland 122438, European Association of Agricultural Economists.
- Sasha C. Breger Bush, 2010. "The World Bank’s approach to increasing the vulnerability of small coffee producers," Brooks World Poverty Institute Working Paper Series 11310, BWPI, The University of Manchester.
- Fabienne Féménia & Alexandre Gohin, 2010. "Faut-il une intervention publique pour stabiliser les marchés agricoles ? Revue des questions non résolues," Review of Agricultural and Environmental Studies - Revue d'Etudes en Agriculture et Environnement, INRA Department of Economics, vol. 91(4), pages 435-456.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Oxford University Press) or (Christopher F. Baum).
If references are entirely missing, you can add them using this form.