Back to Search Start Over

Creating a market for price swaps: Case study of an innovative risk management instrument in the Belgian-Dutch pear market

Authors :
Eewoud Lievens
Kobe Tielens
Erik Mathijs
Source :
Agricultural Economics (AGRICECON), Vol 67, Iss 1, Pp 33-40 (2021)
Publication Year :
2021
Publisher :
Czech Academy of Agricultural Sciences, 2021.

Abstract

While the benefits of using futures to manage price risk are widely recognised, only certain groups of farmers have suitable futures at their disposal. This paper discusses an innovative instrument, developed in the Belgian-Dutch pear market, that provides an alternative to futures markets by creating a market for price swaps. Thus, the instrument provides some benefits of market-traded derivatives (like futures) while remaining a relatively simple instrument, which requires fewer market transactions. The paper describes key properties of the swap contracts and the platform used to trade them. In addition, it compares the conditions required for establishing price swap markets and futures markets. Thus, our study informs the design of similar risk management instruments for commodities and contexts where futures are absent.

Details

Language :
English
ISSN :
0139570X and 18059295
Volume :
67
Issue :
1
Database :
Directory of Open Access Journals
Journal :
Agricultural Economics (AGRICECON)
Publication Type :
Academic Journal
Accession number :
edsdoj.2a31e88e9be645778016414565a36ae4
Document Type :
article
Full Text :
https://doi.org/10.17221/373/2020-AGRICECON