Derivatives contracts as tools of risk management in agricultural markets (Possible applications in italian board trade)

The paper considers the problems of management price risks of commodities in agricultural markets. The investments in public goods, price stabilization schemes, compensatory payments, farm insurance and calamity assistance programs, are some examples of public intervention to reduce risk in agriculture. Until now, the EU’s policies in the framework of Cap have had a major role in lessening the risks and securing a minimum level of income. The ongoing Common Agricultural Policy reforms should be accompanied by risk reducing schemes. Thus, a deep understanding of risk and risk management will assist policymakers in assessing the effectiveness of different types of risk protection issues. An open question arises on the importance to use derivatives, such as futures contracts, as a potential instruments for farmers to protect from the impacts varying commodity price. The ability of producers and farmers will provide for an efficient organization of their farm in order to be competitive on international markets and overtake the disvantages of fragmentation of supply. The main objective of this work is to describe the income insurance in agriculture using commodity derivatives.

Keywords: Risk management, commodity derivatives, futures contracts in agriculture, options, cap

Francesco Corleto, I contratti derivati come strumenti di gestione del rischio nei mercati agricoli (possibili applicazioni nelle borse merci italiane) in "AGRICOLTURA ISTITUZIONI MERCATI " 1,2/2009, pp 159-184, DOI: 10.3280/AIM2009-001012