This indicates a range of .05 to .40. That’s congruent with my experience in the ag industry; farmers tend to be risk-averse concerning price volatility and as such rarely scale up total production massively.
You can hedge against that volatility to some extent by signing purchase contracts in the spring during planting, but buyers obviously offer such contracts based on their own desire to not be stuck buying high at harvest time, so the hedging can’t totally resolve the problem.
There’s also the agronomy of it to consider in some cases; sustainable crop cycles don’t always allow for agile reallocation of land.
https://onlinelibrary.wiley.com/doi/abs/10.1111/agec.12116
This indicates a range of .05 to .40. That’s congruent with my experience in the ag industry; farmers tend to be risk-averse concerning price volatility and as such rarely scale up total production massively.
You can hedge against that volatility to some extent by signing purchase contracts in the spring during planting, but buyers obviously offer such contracts based on their own desire to not be stuck buying high at harvest time, so the hedging can’t totally resolve the problem.
There’s also the agronomy of it to consider in some cases; sustainable crop cycles don’t always allow for agile reallocation of land.