Risk Management in Agricultural Markets: A Review

Tomek, William G.; Peterson, H. Christopher

doi:10.1002/fut.2004

Cited by 97 publications

(56 citation statements)

References 95 publications

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“…Moschini 1994, Tomek andPeterson 2001). The standard in the studies on optimal hedging is that market is efficient such that the futures contract is allowed to be offset (liquidated) by an opposite contract before its maturity.…”

Section: Introductionmentioning

confidence: 99%

Forward hedging under price and production risk of wheat

Xing¹,

Pietola²

2008

AFSci

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This paper estimates optimal hedging ratios for a Finnish spring wheat producer under price and yield uncertainty. The contract available for hedging fixes the price and quantity at the time of sowing for a delivery at harvest. Autoregressive models are used to obtain point forecasts for the conditional mean price and price volatility at harvest. Expected yield and yield volatility are estimated from the field experiment data. A range of coefficients of absolute risk aversion are used in the computations. The results suggest that yield volatility is large and it dominates the price volatility in the optimal hedging decisions of the Finnish wheat producers. The point estimate for the price and yield correlation is negative and has a large magnitude. Thus, a negative correlation between the price and the yield, as signalled by the point estimate, will decrease the optimal hedging ratio since the Finnish farmers do not have access to selling put options when they enter in a forward contract.

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Section: Introductionmentioning

confidence: 99%

Forward hedging under price and production risk of wheat

Xing¹,

Pietola²

2008

AFSci

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“…Especially, seasonal differences are observed in production and consumption of pork due to the four distinct seasons in South Korea (Kim, 2016a). Similarly, seasonality in the price and the demand and/or supply exists inherently in most agricultural commodity markets (Tomek and Peterson 2001). …”

Section: Materials and Methods:-mentioning

confidence: 99%

Estimates of Multi-Collinearity for Supply Function of Pork by Time-Series Data in South Korea.

Kim.¹

2017

IJAR

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“…According to Tomek and Hikaru (2001), farmers are assumed to select a combination of strategies that, for example, maximize net expected returns (profits) subject to the degree of risk they are willing to accept. Clearly, risk management strategies in agriculture vary with farm characteristics and the risk environment (Hope and Lingard, 1992).…”

Section: Background Informationmentioning

confidence: 99%

Uncertainty, risk aversion, and management strategies A case of cocoa farmers in Osun State Nigeria

Agboola¹,

Balogun²,

Elugbaju³

2018

Afr. J. Agric. Res.

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Risk is a major issue that affects so many aspects of people's livelihoods in the developing world. It is imminent in all management decisions of agricultural systems, as a result of fluctuations in price, yield and resource uncertainty. Hence, uncertainty, risk aversion and management strategies were investigated among the cocoa farmers in Osun State, Nigeria. Primary data employed in the study were obtained from 102 cocoa farmers selected through a multi-stage sampling technique. Data were analyzed using descriptive statistics and multivariate probit model. Results showed that farmers view rainfall as the most important source of risk and uncertainty and majority of the farmers utilized mixed cropping as a risk management strategy in their farms. The result of multivariate probit model indicated that age of farmer negatively influenced the probability of precautionary savings while household number and access to information determined their choice of social network as risk management decisions used in the farms. The study recommends government policies and institutional mechanisms that reduce risk (such as crop insurance) and those that facilitate farmers' access to assets like off-farm investments in order to manage risks.

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Risk Management in Agricultural Markets: A Review

Cited by 97 publications

References 95 publications

Forward hedging under price and production risk of wheat

Forward hedging under price and production risk of wheat

Estimates of Multi-Collinearity for Supply Function of Pork by Time-Series Data in South Korea.

Uncertainty, risk aversion, and management strategies A case of cocoa farmers in Osun State Nigeria

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