The use of forward contract at zero transaction cost increases the certainty equivalent income by 1.3% and 2.2% in Australia and UK, respectively. As the forward contract covers more price risks, the producer adopts a riskier crop diversification strategy as indicated by the lower diversification index both in Australia and UK (third graph in Figure 2.4). The crowding out effect is stronger in the UK so that the farmer completely specializes in wheat production and hedges 60% of its production at zero transaction cost.4 Yet the income coefficient of variation is reduced by 15% in this case (Figure 2.4).