Mexican farmers want overhaul of grain-hedging programs

mexico city / reuters With a harvest deadline looming, Mexican grain farmers are calling for an urgent overhaul of two government programs that help small producers buy derivatives contracts to hedge their crops.

With corn prices down nearly 15 per cent since August and facing the possibility of an uninsured crop, farmer groups say they need a solution within three weeks to safeguard the April/May harvest.

“The crop has already been planted,” said Eduardo Palau, the head of CAADES, an agricultural producers’ association. “Now we have to protect it so we can get a good price for it.”

The government has frozen a $41-million fund pending a review of how it operated. But farmers liked the program, which provided government money so they could buy hedging contracts through private brokerages that are then traded on the Chicago exchange. Government picked up 85 per cent of the cost.

By funding the hedging, the government avoids having to shell out big crop subsidies when harvests fail.



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