| 초록 |
The purposes of Vegetable Supply Stabilization Program(VSSP) are to stabilize farm income through controlling vegetable production and harvests and to stabilize market prices through cold storage or junking underlying products when prices plunge. This paper analyzes VSSP's economic value for participating farmers. VSSP consists of 1) contract farming between local agricultural cooperatives and farmers and 2) target price support program by government. VSSP is a forward contract when harvest prices remain in a predetermined range, while it's payoff is similar to a call option when prices soar above the range and is a down-and-out put option--the trigger is the target price-- when prices plunge below the range. Furthermore, a put option is added to the program when prices go below the target price. Therefore, the value of VSSP can be estimated using option pricing models. Using option pricing models, the value of VSSP in 2001 is estimated about 96.1 billion won. From contract farming is 82%~88% of the total value and the rest 12~18% is from government target price support. Under WTO regime, government plans to stop the target price support in VSSP and to expand contract farming.
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