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Volume 48, Issue 1, March 2009 >
Please use this identifier to cite or link to this item:
http://purl.umn.edu/49163
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| Title: | Is geographic diversification sufficient to limit contract grower risk? |
| Authors: | Geyser, Mariette
Louw, Andre
Botha, L. |
| Authors (Email): | Geyser, M. (Mariette.Geyser@up.ac.za)
Louw, A. (andre.louw@up.ac.za)
Botha, L. (louisb@gvf.co.za) |
| Keywords: | Geographic diversification
Contract grower
Risk
Lending
Rainfall
Yield |
| Issue Date: | 2009-03-31 |
| Series/Report no.: | Volume 48
No.1 |
| Abstract: | Lending and financial institutions have looked for a variety of ways to expand their portfolios into agriculture, but because of the risks associated with lending to farmers who lack traditional forms of collateral, they face price and yield risks, causing these inroads to be limited. Market-based instruments are readily available for price risk. Organised exchanges offering the most basic of these instruments, futures and options, have operated for a long time, providing transparency to the market and low-cost risk transfer tools for those able to access them. While the use of price risk management instruments is an incomplete solution, it has sufficient merits on its own and will make the overall burden of risk more bearable. The use of these instruments and multi-peril crop insurance products is expensive and does not provide full protection for financial lending institutions to limit their credit risk exposure. This article determines whether geographic diversification would be sufficient as a risk management tool for lending institutions to limit their credit risk. |
| URI: | http://purl.umn.edu/49163 |
| Institution/Association: | Agrekon>Volume 48, Issue 1, March 2009 |
| Total Pages: | 14 |
| From Page: | 21 |
| To Page: | 35 |
| Collections: | Volume 48, Issue 1, March 2009
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| 3. Geyser et al.pdf | | 281Kb | PDF | View/Open |
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