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Do Income Support Programs Impact Producer Hedging Decisions? Evidence from a Cross‐Country Comparative
Author(s) -
Woolverton Andrea E.,
Sykuta Michael E.
Publication year - 2009
Publication title -
applied economic perspectives and policy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.4
H-Index - 49
eISSN - 2040-5804
pISSN - 2040-5790
DOI - 10.1111/j.1467-9353.2009.01469.x
Subject(s) - cross country , economics , business , public economics , economic impact analysis , developing country , economic growth , demographic economics , microeconomics
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.