Journal Article

Do Income Support Programs Impact Producer Hedging Decisions? Evidence from a Cross-Country Comparative

Andrea E. Woolverton and Michael E. Sykuta

in Applied Economic Perspectives and Policy

Published on behalf of Agricultural and Applied Economics Association

Volume 31, issue 4, pages 834-852
Published in print January 2009 | ISSN: 2040-5790
Published online January 2009 | e-ISSN: 2040-5804 | DOI: http://dx.doi.org/10.1111/j.1467-9353.2009.01469.x
Do Income Support Programs Impact Producer Hedging Decisions? Evidence from a Cross-Country Comparative

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This article provides a unique perspective to why U.S. producers’ hedging practices are not consistent with the price-risk management literature. We conduct a formal test of income support program impacts with survey data from South Africa and the United States, which have different producer income support policies. We find that producing in a supported environment (U.S.) decreases hedging for preplanting and preharvest expected yields by 30.39% and 20.03%, respectively. This study raises issues for further inquiry regarding both comparative agricultural lending practices and the relative costs of price-risk management tools.

Journal Article.  6970 words.  Illustrated.

Subjects: Economics

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