Producers and many others in much of the developing world are exposed to highly volatile commodity revenues. A range of methods have been tried to either reduce this exposure (for example, through compensatory schemes and production/export controls) or to better manage it (e.g., through stabilization funds or market-based risk management mechanisms). This paper, one of a series on this subject commissioned by the International Institute for Sustainable Development (IISD), focuses on market-based instruments. Rather than providing a broad, theoretical description (which is amply available from other sources, including international organizations such as FAO, UNCTAD and World Bank) it takes the case of one commodity—coffee—and looks at how market-based risk management can be used to improve coffee growers' lives.
