Hedging Rainfall Risk by Farmers Growing Soyabean in Jhalawar District

Rajiv Seth, Valeed A. Ansari and Manipadma Datta
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Rajiv Seth: Rajiv Seth is the Registrar, TERI University, New Delhi, India, and a Ph.D. candidate at the Aligarh Muslim University, Aligarh, Uttar Pradesh, India; e-mail: rseth@teri.res.in
Valeed A. Ansari: Valeed A. Ansari is Reader, Department of Business Administration, Aligarh Muslim University, Aligarh, Uttar Pradesh, India; e-mail: valeedin@yahoo.com
Manipadma Datta: Manipadma Datta is Professor, Institute of Management Technology, Ghaziabad, Uttar Pradesh, India; e-mail: mdatta@imt.edu

Margin: The Journal of Applied Economic Research, 2008, vol. 2, issue 2, 199-212

Abstract: Rainfall risk to the yield of a crop can be hedged, to an extent, by the use of weather derivatives. The paper considers a theoretical model which maximises the expected utility of a farmer growing a crop, with respect to planned production. An option to hedge the weather risk to yield, through purchase of weather derivatives, is introduced. The case of farmers growing soyabean in Jhalawar district of Rajasthan in central India is taken as an example in order to determine the theoretical willingness to pay to hedge volumetric risk to yield.

Keywords: Crop Yield Risk; Weather Derivatives; Willingness to Pay; JEL Classification: Q14 (search for similar items in EconPapers)
Date: 2008
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Persistent link: https://EconPapers.repec.org/RePEc:sae:mareco:v:2:y:2008:i:2:p:199-212

DOI: 10.1177/097380100800200203

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