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.
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Paper provided by Lancaster University Management School, Economics Department in its series Working Papers with number
002167.
References listed on IDEAS 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.:
Anderson, Ronald W & Danthine, Jean-Pierre, 1981.
"Cross Hedging,"
Journal of Political Economy,
University of Chicago Press, vol. 89(6), pages 1182-96, December.
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