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Hedging a Government Entitlement: The Case of Countercyclical Payments
- Article from:
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Journal of Agricultural and Applied Economics
- Article date:
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December 1, 2007
- Author:
- Anderson, John D; Coble, Keith H; Miller, J Corey
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Copyright informationCopyright Southern Agricultural Economics Association Dec 2007. Provided by ProQuest LLC. (Hide copyright information)
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This research evaluates whether the introduction of countercyclical payments creates an incentive for program crop producers to hedge the expected government payment using futures and/or options. Results indicate that some level of countercyclical payment hedging is optimal for risk-averse decision makers. However, optimal hedge ratios depend on planting time expectations of marketing year average price as well as on what crop, if any, has been planted on countercyclical payment base acres. These results suggest that the ability to hedge may make these payments more decoupled but also illustrate the distortion of producer behavior induced by farm programs.
Key Words: countercyclical ...
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Farm program sign-up starts
The Pantagraph Bloomington, IL;
October 1, 2003 ;
PANTAGRAPH STAFF;
165 words
......to receive direct and countercyclical payments. Both types of payments...per bushel for soybeans. Countercyclical payments are made only if the effective...price. The maximum 2004 countercyclical payments will be 40 cents per bushel...percent of the projected countercyclical ...
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University study backs use of crop insurance
The Pantagraph Bloomington, IL;
March 14, 2003 ;
Chris Anderson;
472 words
......Thursday shows countercyclical payments do not cover...substituting countercyclical payments for crop...insurance and countercyclical payments protect prices...indicates that countercyclical payments and multi...correlated. So, countercyclical payments ...
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USDA to start making countercyclical payments soon.(USDA PROGRAMS)
The Kiplinger Agriculture Letter;
October 1, 2004 ;
31 words
...By midmonth, USDA will start making countercyclical payments. All program crops except oilseeds are likely to qualify. This fall, Uncle Sam will dole out the first 35% of projected FY 2005 crop payments.
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Farmers will have to repay countercyclical payments for soybeans,...
The Kiplinger Agriculture Letter;
May 27, 2005 ;
77 words
...Farmers will have to repay countercyclical payments for soybeans: 18cents/bu., or 70% of what USDA...average is above $5.36. The same scenario holds for countercyclical payments on wheat, although they've amounted to only 2cents...
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Feeding the Farms
The Washington Post;
August 3, 2001 ;
450 words
......fixed payments rather than the countercyclical payments, favored by Democrats, that rise...Republican face. But a new layer of countercyclical payments would be provided atop them. The...Our own sense is that modest countercyclical payments may be useful in stabilizing not...
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LOW COTTON PRICES OFFER DIFFERENT HEDGING OPPORTUNITY
US Fed News Service, Including US State News;
July 20, 2006 ;
398 words
......is to hedge the risk to countercyclical payments using the futures market...viable situation for hedging countercyclical payments. If futures rise above 56 cents, countercyclical payments begin to erode at that...
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Next CCP should be 'in mail' soon.(countercyclical payments)(Brief...
Pro Farmer;
February 12, 2005 ;
51 words
......Supply & Demand (S&D) Reports include season-average price estimates. These estimates are used to project annual countercyclical payments (CCPs). Using data from the Feb. 9 S&D, expect a 14 cents CCP installment for corn; 9.1 cents for soybeans; and...
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Support payments on 2004 crops.(USDA)
The Kiplinger Agriculture Letter;
November 12, 2004 ;
142 words
......support prescribed to kick in during soft markets. Countercyclical payments, marketing loan deficiency payments and gains from...billion when finished next fall. All major crops will get countercyclical payments on 2004 output. Projected for cotton...13.7o/lb., more...
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Commodity producers urged to verify records
St. Joseph News-Press;
July 28, 2002 ;
150 words
......be correct in order to receive accurate direct and countercyclical payments in the near future, said Ann Veneman, U.S. Secretary...this fall." The legislation provides for direct and countercyclical payments to be made to eligible producers of certain crops through...
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+(via+Knight-Ridder%2fTribune+Business+News) "Agweek (Grand Forks, North Dakota) (via Knight-Ridder/Tribune Business News)")
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Higher Market Prices Could Lower Payments from Government Farm Programs.
Agweek (Grand Forks, North Dakota) (via Knight-Ridder/Tribune Business News);
August 5, 2002 ;
522 words
......such as loan deficiency payments and the countercyclical payments included in the 2002 farm bill are intended...and decline when crop values go up. The countercyclical payments don't apply to last year's crop, but will...this year. The thing to remember about the countercyclical ...
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Analyzing Producer Preferences for Counter-Cyclical Government Payments
Journal of Agricultural and Applied Economics;
December 1, 2003 ;
Miller, J Corey; Barnett, Barry J; Coble, Keith H;
787 words
......among alternative countercyclical payment programs for representative...in Mississippi. Countercyclical payment programs are found...bootstrapping, countercyclical payments, nonparametric...Act. One proposed countercyclical alternative would...have created a ...
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American News, Aberdeen, S.D., Land Lines Column.
Knight Ridder/Tribune Business News;
May 19, 2002 ;
787 words
......the updated countercyclical base and...approval. Countercyclical payments: If you're...entitled to countercyclical payments depends on...Wheat: $2.80. Countercyclical payments have been...eligible for countercyclical payments if the price...form of a ...
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