Please use this identifier to cite or link to this item: https://hdl.handle.net/1959.11/638
Title: Why do farmers have so little interest in futures markets?
Contributor(s): Simmons, PR  (author)
Publication Date: 2002
Open Access: Yes
DOI: 10.1111/j.1574-0862.2002.tb00098.x
Handle Link: https://hdl.handle.net/1959.11/638
Abstract: A farm financial model with leverage and investment in two farm enterprises is specified. The model is extended to incorporate futures hedging and the Separation Theorem is used to show that optimal hedging is zero. The assumption of a risk-free asset is relaxed and, while this leads to a violation of the Separation Theorem, the result that optimal hedging is zero is maintained providing that futures markets are efficient. It is concluded that if capital markets are efficient then farmers will have little interest in futures markets except to speculate.
Publication Type: Journal Article
Source of Publication: Agricultural Economics, 27(1), p. 1-6
Publisher: Elsevier Science
Place of Publication: Australia
ISSN: 0169-5150
Field of Research (FOR): 140201 Agricultural Economics
Peer Reviewed: Yes
HERDC Category Description: C1 Refereed Article in a Scholarly Journal
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Appears in Collections:Journal Article

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