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The efficacy of a forward market for the agricultural sector in mitigating climate risk: A potential alternative to agricultural subsidies?

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  • Nan, Qiuying
  • Sun, Mengchan
  • Nie, Jiajia
  • Yang, Rui
  • Wan, Lijuan

Abstract

This study evaluates the viability of forward markets as an alternative to agricultural subsidy policies under climate risks. We assessed the impact of three distinct strategies, cost subsidy, minimum price subsidy, and forward contracts on farmers, consumers, and society. The findings reveal that cost subsidies generate superior advantages for farmers and society when crop yield uncertainty is minimal. Conversely, farmers accrue greater benefits by leveraging forward contracts instead of relying on government subsidies. These results underscore the need for policymakers to design subsidy policies tailored to specific agricultural contexts to ensure optimal benefits for all stakeholders.

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  • Nan, Qiuying & Sun, Mengchan & Nie, Jiajia & Yang, Rui & Wan, Lijuan, 2023. "The efficacy of a forward market for the agricultural sector in mitigating climate risk: A potential alternative to agricultural subsidies?," Finance Research Letters, Elsevier, vol. 55(PB).
    • Handle: RePEc:eee:finlet:v:55:y:2023:i:pb:s1544612323003719
    DOI: 10.1016/j.frl.2023.103999
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    References listed on IDEAS

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    Cited by:

    1. Geng, Jinqiang & Huo, Qingqing & Jia, Shanshan, 2023. "Parasitic Behavior and Separation Countermeasures in Large-scale Farming: Insights from Shijiazhuang, China," Research on World Agricultural Economy, Nan Yang Academy of Sciences Pte Ltd (NASS), vol. 4(4), October.
    2. Sha, Zhouhao & Ren, Dong & Li, Chengyou & Wang, Zeru, 2024. "Agricultural subsidies on common prosperity: Evidence from the Chinese social survey," International Review of Economics & Finance, Elsevier, vol. 91(C), pages 1-18.

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