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Factors influencing farm level use of futures and options in commodity marketing

Author

Listed:
  • Larry D. Makus

    (Department of Agricultural Economics and Rural Sociology at the University of Idaho)

  • Biing-Hwan Lin

    (Department of Agricultural Economics and Rural Sociology at the University of Idaho)

  • John Carlson

    (Department of Agricultural Economics and Rural Sociology at the University of Idaho)

  • Rose Krebill-Prather

    (Department of Agricultural Economics and Rural Sociology at the University of Idaho)

Abstract

A probit model is used to quantify factors influencing the probability that a selected group of agricultural decision makers (producers and landowners receiving crops from a share lease) used futures or options for commodity marketing during the 1986, 1987, or 1988 marketing years. Respondents were selected from participants in orientation sessions associated with the nationwide Futures and Option Marketing Pilot Program. Results suggest previous use of cash forward contracts, location, size and farming operation (measured by gross farm sales), having a college degree(s), and membership in a marketing club have the greatest impact on the probability of using futures and options.

Suggested Citation

  • Larry D. Makus & Biing-Hwan Lin & John Carlson & Rose Krebill-Prather, 1990. "Factors influencing farm level use of futures and options in commodity marketing," Agribusiness, John Wiley & Sons, Ltd., vol. 6(6), pages 621-631.
    • Handle: RePEc:wly:agribz:v:6:y:1990:i:6:p:621-631
    DOI: 10.1002/1520-6297(199011)6:6<621::AID-AGR2720060608>3.0.CO;2-E
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    References listed on IDEAS

    as
    1. Mintert, James, 1987. "Farmers Current Marketing Practices And Attitudes," 1987 Annual Meeting, August 2-5, East Lansing, Michigan 269966, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    2. Amemiya, Takeshi, 1981. "Qualitative Response Models: A Survey," Journal of Economic Literature, American Economic Association, vol. 19(4), pages 1483-1536, December.
    3. Oral Capps & Randall A. Kramer, 1985. "Analysis of Food Stamp Participation Using Qualitative Choice Models," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 67(1), pages 49-59.
    4. Paul, Allen B. & Heifner, Richard G. & Gordon, J. Douglas, 1985. "Farmers' Use of Cash Forward Contracts, Futures Contracts, and Commodity Options," Agricultural Economic Reports 307991, United States Department of Agriculture, Economic Research Service.
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    Citations

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    Cited by:

    1. Carrer, Marcelo José & Silveira, Rodrigo Lanna F. & Meirelles De Souza Filho, Hildo, 2017. "Citrus Producers' Choice of Price Risk Management Tools," 2017 Annual Meeting, July 30-August 1, Chicago, Illinois 258352, Agricultural and Applied Economics Association.
    2. Pennings, Joost M.E. & Garcia, Philip & Irwin, Scott H. & Good, Darrel L., 2003. "How To Group Market Participants? Heterogeneity In Hedging Behavior," 2003 Annual meeting, July 27-30, Montreal, Canada 21963, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    3. Aymeric Ricome & Arnaud Reynaud, 2022. "Marketing contract choices in agriculture: The role of price expectation and price risk management," Agricultural Economics, International Association of Agricultural Economists, vol. 53(1), pages 170-186, January.
    4. Larry S. Lev & Robert P. King, 1995. "MarketTools: An educational commodity marketing game," Agribusiness, John Wiley & Sons, Ltd., vol. 11(2), pages 187-193.
    5. Wang, H. Holly & Du, Wen, 2005. "Intertemporal Risk Management Decisions of Farmers under Preference, Market, and Policy Dynamics," 2005 Annual meeting, July 24-27, Providence, RI 19526, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    6. Perry, Janet E. & Mishra, Ashok K., 1999. "Forward Contracting Of Inputs: A Farm-Level Analysis," Journal of Agribusiness, Agricultural Economics Association of Georgia, vol. 17(2), pages 1-15.
    7. K M Mehedi Adnan & Liu Ying & Swati Anindita Sarker & Muhammad Hafeez & Amar Razzaq & Muhammad Haseeb Raza, 2018. "Adoption of Contract Farming and Precautionary Savings to Manage the Catastrophic Risk of Maize Farming: Evidence from Bangladesh," Sustainability, MDPI, vol. 11(1), pages 1-19, December.
    8. Joost M.E. Pennings & Raymond M. Leuthold, 1999. "Commodity Futures Contract Viability: A Multidisciplinary Approach," Finance 9905002, University Library of Munich, Germany.
    9. Wencong Lu & Abdul Latif & Raza Ullah, 2017. "Simultaneous adoption of contract farming and off-farm diversification for managing agricultural risks: the case of flue-cured Virginia tobacco in Pakistan," Natural Hazards: Journal of the International Society for the Prevention and Mitigation of Natural Hazards, Springer;International Society for the Prevention and Mitigation of Natural Hazards, vol. 86(3), pages 1347-1361, April.
    10. Riley, John Michael & Anderson, John D., 2009. "Producer Perceptions of Corn, Soybean and Cotton Price Risk," 2009 Annual Meeting, January 31-February 3, 2009, Atlanta, Georgia 46865, Southern Agricultural Economics Association.

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