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

Andrea E. Woolverton and Michael Sykuta

Review of Agricultural Economics, 2009, vol. 31, issue 4, 834-852

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.

Date: 2009
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