The Rural Adjustment Scheme: An Economic Analysis

The Rural Adjustment Scheme (RAS) is assessed in relation to its stated goals, and suggestions made for how it should be changed so as to better achieve these goals, imporant parts of the program are still poorly motivated and should be removed or restructured. It is argued taht one of the main efficiency goals of the RAS- improved risk management- would be facilitated by better integrating existing risk management strategies into the eligibility criteria of the scheme. This would help prevent farm failure and thus reduce the need for RAS. Unfortunately, however, there is a large gap in our understanding of the potential value of instruments such as futures contracts.