ESTIMATING THE IMPACTS OF DIFFERING PRICE-RISK MANAGEMENT STRATEGIES ON THE NET INCOME OF SALINAS VALLEY LETTUCE PRODUCERS: A STOCHASTIC SIMULATION APPROACH

While government safety-net programs are used to mitigate the price risk for commodity producers, limited programs exist for specialty crop producers. Specialty crop producers utilize forward contracts to reduce downside price risk. In order to estimate the method of price-risk management, if any, that is preferable to selling at market determined prices, a stochastic simulation model was constructed. The completed simulation model was used to estimate probability distributions for Salinas Valley net income under different pricing scenarios. Probabilities of reaching various net income thresholds were compared. Results indicate that Salinas Valley lettuce producers should maximize profitability by using forward contracts.


Issue Date:
2005
Publication Type:
Conference Paper/ Presentation
PURL Identifier:
http://purl.umn.edu/36310
Total Pages:
20
Series Statement:
Selected Paper




 Record created 2017-04-01, last modified 2017-08-22

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