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 BV | Place of Publication: | Netherlands | ISSN: | 1574-0862 0169-5150 |
Fields of Research (FoR) 2008: | 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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