Market-Based Price-Risk Management: Welfare Gains for Coffee Producers from Efficient Allocation of Resources
Sushil Mohan (),
Alan Reeves and
Oxford Development Studies, 2011, vol. 39, issue 1, 49-68
The volatility of coffee prices exposes coffee producers to price risk. Price risk is one of many risks faced by commodity producers in developing countries. Coffee is widely traded in the international commodity derivative markets. This offers scope for coffee producers to manage their price risk by hedging on these markets. The hedging mechanism recommended is based on the use of coffee futures and options. The mechanism involves costs, so the benefits of hedging need to be evaluated in order to assess its usefulness for producers. It emerges that the main benefit lies in producers being able to allocate resources more efficiently in the production of coffee. An analysis of theoretical and field evidence shows that this benefit can potentially be quite high, especially for risk-averse producers. This underlines the need to provide producers with access to suitable price-risk hedging mechanisms.
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2) Track citations by RSS feed
Downloads: (external link)
Access to full text is restricted to subscribers.
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:taf:oxdevs:v:39:y:2011:i:1:p:49-68
Ordering information: This journal article can be ordered from
Access Statistics for this article
Oxford Development Studies is currently edited by Jo Boyce and Frances Stewart
More articles in Oxford Development Studies from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().