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Futures, Options, and Farm Programs: Report to Congress on a Study Mandated by the Food Security Act of 1985

Author

Listed:
  • Heifner, Richard G.
  • Glauber, Joseph W.
  • Miranda, Mario J.
  • Plato, Gerald E.
  • Wright, Bruce H.

Abstract

Expanded use of futures and options markets by farmers can partly substitute for price support and deficiency payment programs in protecting farmers' incomes. Farmers can broaden their pricing alternatives and partly protect themselves against price declines within the year, but they can gain little interyear income stability by using futures, options, or cash forward contracts. Government programs to expand farmers' use of such contracts generally would not raise or stabilize market prices or farmers' incomes unless Government subsidies were involved. Such subsidies would be difficult to administer and offer few advantages over conventional loan and deficiency payment programs.

Suggested Citation

  • Heifner, Richard G. & Glauber, Joseph W. & Miranda, Mario J. & Plato, Gerald E. & Wright, Bruce H., 1990. "Futures, Options, and Farm Programs: Report to Congress on a Study Mandated by the Food Security Act of 1985," Staff Reports 278261, United States Department of Agriculture, Economic Research Service.
    • Handle: RePEc:ags:uerssr:278261
    DOI: 10.22004/ag.econ.278261
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    References listed on IDEAS

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    1. Heifner, Richard G. & Wright, Bruce H., 1989. "Potentials for Substituting Farmers' Use of Futures and Options for Farm Programs," Agricultural Economic Reports 308136, United States Department of Agriculture, Economic Research Service.
    2. Grant, Dwight, 1989. "Optimal futures positions for corn and soybean growers facing price and yield risk," Technical Bulletins 312296, United States Department of Agriculture, Economic Research Service.
    3. Plato, Gerald, 1989. "Effects of a subsidized put option program and forward selling on farmers' revenue risks," Technical Bulletins 312313, United States Department of Agriculture, Economic Research Service.
    4. Glauber, Joseph W. & Miranda, Mario J., 1989. "Subsidized put options as alternatives to price supports," Technical Bulletins 312310, United States Department of Agriculture, Economic Research Service.
    5. Hartzmark, Michael L, 1987. "Returns to Individual Traders of Futures: Aggregate Results," Journal of Political Economy, University of Chicago Press, vol. 95(6), pages 1292-1306, December.
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    1. Heifner, Richard G. & Wright, Bruce H., 1989. "Potentials for Substituting Farmers' Use of Futures and Options for Farm Programs," Agricultural Economic Reports 308136, United States Department of Agriculture, Economic Research Service.
    2. Siebert, Jerome & Klonsky, Karen & Pradhan, Vijay, 1993. "Marketing California Cotton: An Economic and Policy Overview," CUDARE Working Papers 198627, University of California, Berkeley, Department of Agricultural and Resource Economics.

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