Table 5. Impacts of Market Institutions and Government Policies on
Farmers’ Optimal Risk Management Portfolio
|
Alternative Portfolios |
Hedge Ratio |
Crop Ins. |
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30% Premium Loading | ||||
|
Year1 |
Year2 |
Year3 |
Year4 |
Year5 |
Year1-5 |
CE($) |
CE($) | |
|
With Transaction Cost ($0.017/Bushel) | ||||||||
|
H & CI & G(DP, LDP, CCP) |
0.25 |
0.31 |
0.32 |
0.32 |
0.26 |
0.85 |
62.28 |
62.15 |
|
H & CI & G(DP, LDP) |
0.39 |
0.44 |
0.44 |
0.44 |
0.38 |
0.85 |
48.82 |
48.69 |
|
H & CI & G(DP) |
0.28 |
0.57 |
0.65 |
0.72 |
0.74 |
0.85 |
34.58 |
34.45 |
|
H & CI |
0.32 |
0.59 |
0.66 |
0.72 |
0.74 |
0.85 |
4.81 |
4.68 |
|
CI & G(DP, LDP, CCP) |
-- |
-- |
-- |
-- |
-- |
0.85 |
62.20 |
62.07 |
|
Without Transaction Cost ($0/bushel) | ||||||||
|
H & CI & G(DP, LDP, CCP) |
0.42 |
0.39 |
0.37 |
0.35 |
0.27 |
0.85 |
62.68 |
62.54 |
|
H & CI & G(DP, LDP) |
0.61 |
0.54 |
0.50 |
0.48 |
0.39 |
0.85 |
49.39 |
49.26 |
|
H & CI & G(DP) |
0.78 |
0.79 |
0.77 |
0.79 |
0.77 |
0.85 |
35.44 |
35.31 |
|
H & CI |
0.78 |
0.79 |
0.77 |
0.79 |
0.77 |
0.85 |
5.67 |
5.54 |
|
CI & G(DP, LDP, CCP) |
^B ^B |
^B ^B |
^B ^B |
^B ^B |
^B ^B |
0.85 |
62.20 |
62.07 |
Note: The base portfolio is the portfolio that includes all risk management tools, i.e. H & CI & G(DP, LDP, CCP).
49
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