Research Reports
A Study on Efficient Risk Management Instruments Coping with Agricultural Commodities Price Risk
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AuthorKim, Taehoo
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Publication Date2023.02.08
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Original
Purpose of Research
○ Although current risk management policies related to agricultural price volatility include the supply and demand stabilization support system, the purchase loan program, and revenue protection insurance, these policies are concentrated in specific product groups such as vegetables and pulses. However, the policy effects of the present price risk management instruments have been limited in responding to changes in market conditions. Therefore, preliminary studies are needed to introduce efficient price risk management measures through the division of various roles between the private and public sectors.
○ Major developed countries in agriculture have actively utilized efficient risk management instruments including insurance, Income Stabilization Scheme, futures and forward contracts according to each product group’s characteristics and degree of price volatility risk. Nevertheless, in Korea, preliminary studies have not been conducted on whether overall conditions for introducing these instruments have been formed, and if they are introduced, which products are suitable.
○ Thus, it is necessary to examine each product group’s characteristics of price fluctuations and to review the conditions for and possibility of introducing efficient price risk management measures by major product on the principle of designing risk management techniques that can minimize government failure and market distortions.
○ Therefore, this study aims to present efficient price risk management instruments for each product group by measuring price volatility risk by product group and examining the current status and problems of price risk management instruments currently implemented by the government and in the market.
(For more information, please refer to the report.)
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