Market-based Price-risk Management for Coffee Producers

    Research output: Contribution to journalArticlepeer-review


    Coffee is characterised by high levels of price fluctuation, which exposes
    producers to price risk. Its wide trading in international commodity futures
    markets offers scope for producers to manage the risk by hedging on these
    markets, the mechanism for which is based on the use of put options. This
    article uses historical data of actual put-options contracts to estimate the
    costs of the mechanism, the benefits being inferred from field evidence. It
    emerges that the costs are relatively low and outweighed by the benefits for
    most producers. The article then looks at the operational feasibility of the
    mechanism for producers and compares it with other hedging mechanisms.
    Original languageEnglish
    Pages (from-to)333-354
    JournalDevelopment Policy Review
    Issue number3
    Publication statusPublished - 4 May 2007


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