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

Review of Agricultural Economics, Vol. 31, No. 4, pp. 834-852, 2009

19 Pages Posted: 2 Apr 2010  

Andrea Woolverton

United Nations - Food and Agriculture Organization (FAO)

Michael E. Sykuta

University of Missouri at Columbia - Contracting and Organizations Research Institute (CORI); University of Missouri at Columbia - Division of Applied Social Sciences

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Date Written: December 1, 2009

Abstract

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.

Keywords: risk managment, institutions, comparative, hedging, commodities, corn, South Africa, futures

Suggested Citation

Woolverton, Andrea and Sykuta, Michael E., Do Income Support Programs Impact Producer Hedging Decisions? Evidence from a Cross-Country Comparative (December 1, 2009). Review of Agricultural Economics, Vol. 31, No. 4, pp. 834-852, 2009 . Available at SSRN: https://ssrn.com/abstract=1582620

Andrea Woolverton (Contact Author)

United Nations - Food and Agriculture Organization (FAO) ( email )

Viale delle Terme di Caracalla
Rome, Lazio 00100
Italy

Michael Sykuta

University of Missouri at Columbia - Contracting and Organizations Research Institute (CORI) ( email )

135 Mumford Hall
Columbia, MO 65211
United States
573-882-1738 (Phone)

HOME PAGE: http://cori.missouri.edu

University of Missouri at Columbia - Division of Applied Social Sciences ( email )

135 Mumford Hall
Columbia, MO 65211
United States

HOME PAGE: http://michaelsykuta.com

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