The design and pricing of fixed‐ and moving‐window contracts: An application of Asian‐Basket option pricing methods to the hog‐finishing sector

Asian‐Basket‐type moving‐window contracts are an increasingly used risk‐management tool in the North American hog sector. The moving‐window contract is decomposed into a portfolio of a long Asian‐Basket put and a short Asian‐Basket call option. A projected break‐even price is used to determine the floor price, and then Monte Carlo simulation methods are used to price both a moving‐ and a fixed‐window contract. These methods provide unbiased pricing of fixed‐ and moving‐window hog‐finishing contracts of 1‐year duration. © 2003 Wiley Periodicals, Inc. Jrl Fut Mark 23:1047–1073, 2003     

Sources of Sectoral Growth in an Economy Wide Context: The Case of U.S. Agriculture

Growth in U.S. agriculture is linked to the non-farm economy through domestic terms of trade and factor market adjustments. With almost stable input growth, the relatively large contributions from growth in Total Factor Productivity (TFP) are passed on to intermediate and final consumers in the form of declining real prices for primary farm products. The resulting net growth in the real value of farm output (GDP) is relatively low (0.25% per annum). The decomposition of TFP suggests that public agricultural stock of knowledge and infrastructure are robustly associated with TFP growth, while spill-overs from private agricultural and economy wide research and development (R and D) are positive but, relatively small.     

Country of origin labeling for complex supply chains: the case for labeling the location of different supply chain links

We investigate the value of a country of origin label (COOL) that separately identifies the geographic location of different stages in a food product's supply chain. We estimate the willingness‐to‐pay (WTP) of U.S. consumers for a packaged cereal product where the key grain ingredient may be grown in one country and processed in a second country (multicountry supply chain) and compare it to equivalent products that have both stages located in a single country. We find consumer WTP for products with single‐country and multicountry supply chains are statistically different, meaning that simplifying a multicountry label by listing only the country where the ingredients are grown or only the country where the ingredients are processed can result in different consumer values. We also find that for countries with a poor quality reputation, consumers respond more negatively when that country has the “last touch” than when that country's involvement is limited to upstream supply chain links.     

Making tourism work for the poor: Strategies and challenges in southern Africa

This article analyses strategies for 'pro-poor tourism' (PPT), ie strategies that increase the benefits to poor people from tourism development. Based on an international review of six pro-poor tourism case studies, it outlines the wide range of pro-poor tourism strategies used and their impacts to date, with particular focus on southern African case studies. By analysing their progress, problems and the critical factors influencing them, the article identifies implications for the way forward. This review underpins four propositions. First, despite commercial constraints, much can be done to enhance the contribution of tourism to poverty reduction, and a 'PPT' perspective assists in this endeavour. Secondly, PPT strategies can, and should be, incorporated by all actors in tourism, whether in government or business, at local or policy level. Thirdly, a wide range of impacts on poor people, going well beyond jobs, need to be recognised and enhanced. Finally, PPT strategies are difficult, but particularly relevant in southern Africa given the challenges of economic and political transformation, as well as the opportunity to influence international discussions on 'sustainable tourism' at the World Summit on Sustainable Development in Johannesburg in 2002.     

Asymmetries between Rich and Poor Countries in Financial Crisis Responses: The Need for a Flow-of-Funds Approach

This paper focuses on the manner in which interest rates have been raised to, and sustained at, extremely high levels in developing and emerging market economies as a consequence of recent financial crises. By contrast rich market economies have typically lowered interest rates and injected liquidity in response to incipient financial crises. The paper first sketches the logic that lies behind extremely high interest rates (nominal and real) as an element of crisis resolution. It suggests that this reflects a money-phobic view of financial markets and also conflicts with some well-established economics. It then reviews the conventional wisdom about why richer economies have enjoyed sustained price stability in recent years and why this in turn has allowed their monetary authorities to be relaxed about injecting additional liquidity in response to LTCM (1998) and September 11 (2001)-type crises. It is pointed out that this conventional wisdom is also money-phobic in that it neglects the build up of corporate and government debt in bond and financial derivative form that has been associated with recent financial developments. This analysis helps to contest the common view that emerging market economies pay a higher price merely because their polices are "bad'. Finally, the paper reviews the manner in which the financial systems of developing and emerging market economies respond to the destabilization created by corrosively high real rates of interest. Even when bankruptcy arrangements are well established, certain new forms of financial flows and instruments are implicit in this response, but are invariably ignored in formal modelling.     

Decomposing Local: A Conjoint Analysis of Locally Produced Foods

Increasingly, foods are marketed as "locally grown." We use stated preference data from a choice-based conjoint instrument to address two issues surrounding consumer demand for locally produced goods: (1) what is the geographical extent of "local," and (2) is the value consumers place on "local" production distinct from other factors that are often confounded with locally produced foods such as farm size and product freshness? We find our subjects place similar value on products produced "in state" and "nearby" and that consumers' willingness to pay for local production is independent from values associated with product freshness and farm size.     

AGRICULTURE IN THE URUGUAY ROUND: AMBITIONS AND REALITIES

Agricultural trade policies are basically a function of domestic policy considerations which have produced high levels of support in many countries. New policy instruments such as direct payments, which are more demanding in terms of information costs but which distort resource allocation less, are becoming more attractive. Unilateral liberalisation is, however, unlikely. Freer trade is a public good which requires international collective action to be provided. Countries which have a clear-cut trade interest in liberalising markets for commodities they export can play the role of catalyst in international co-ordination. The existence of big players is a favourable factor. Hence, the drift of the Round towards a co-ordination of US-EC interests. Both political economy and trade interest considerations suggest that an agreement reached will have its main impact on crops which are widely traded. The main constraining factor of an agreement on EC and US agriculture will be the discipline it will impose on the use of export subsidies. Agriculture will still not come fully under GATT rules which apply to other sectors, but in the future the CAP will be more constrained by international commitments than in the past.