Modeling the Market and Welfare Effects of Mexico's “Agriculture by Contract” Program

Sergio Lence ()

ISU General Staff Papers from Iowa State University, Department of Economics

Abstract: “Agriculture by contract” () is the main Mexican government program aimed at mitigating price risks for agricultural producers in Mexico. [Math Processing Error] has unique features involving forward contracts and the provision of basis subsidies and subsidized exchange-traded futures options for both producers and intermediaries. A simulation model is developed to analyze the market and welfare effects of [Math Processing Error]. When applied to corn, results show that [Math Processing Error] exerts substantial impacts and causes large transfers across sectors. Even if [Math Processing Error] reduced intermediaries' market power to the largest extent feasible, results indicate that it would still cause important losses in aggregate welfare.

Date: 2015-01-01
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Related works:
Journal Article: Modeling the Market and Welfare Effects of Mexico's "Agriculture by Contract" Program (2016)
Working Paper: Modeling the Market and Welfare Effects of Mexico's “Agriculture by Contract” Program (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:isu:genstf:201501010800001064

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