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The Potential Role Of Price Insurance To Improve Welfare Of Honduran Coffee Producers

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  • McCarthy, Nancy
  • Sun, Yan

Abstract

Coffee is the major export crop in Honduras, but the export price is relatively low. This paper investigates the potential role for a coffee price insurance product - based on the use of the coffee future market - to increasing producer welfare by reducing coffee price risk faced by individual farmers. By constructing a typology of six different types of coffee farmers and developing a forecasting model, the authors show that more risk-averse farmers would prefer to buy the insurance contract than those with lower risk aversion. The subjective assessments analysis also show that Honduran coffee producers have optimistic expectations for coffee prices and appear to underestimate the variability of coffee prices.

Suggested Citation

  • McCarthy, Nancy & Sun, Yan, 2004. "The Potential Role Of Price Insurance To Improve Welfare Of Honduran Coffee Producers," 2004 Annual meeting, August 1-4, Denver, CO 20347, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    • Handle: RePEc:ags:aaea04:20347
    DOI: 10.22004/ag.econ.20347
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    File URL: https://ageconsearch.umn.edu/record/20347/files/sp04mc01.pdf
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    References listed on IDEAS

    as
    1. Hearne, Robert R. & Barbier, Bruno & Gonzalez, Jose Manuel, 2002. "Development Of Minimum Cost, Incentive Based Plan For The Implementation Of A Technology Standard For Coffee Processing In Honduras," 2002 Annual meeting, July 28-31, Long Beach, CA 19761, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
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      Keywords

      Risk and Uncertainty;

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