Evaluating the Saskatchewan Short-Term Hog Loan Program

Donald Lien, David A. Hennessy
February 2005  [05-WP 385]

The Saskatchewan short-term hog loan program of 2002 provided a non-market credit line to participating hog producers. The repayment conditions for cash advances committed to by the provincial government depend on later hog prices, and so the program has derivative contract attributes. We model the contracts and use an estimated spot price stochastic process to establish summary statistics for producer benefits from the program.

Keywords: agricultural policy, derivative contract, domestic support, international trade agreements.

JEL classification: Q1, G3

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