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Understanding the intention to use commodity futures contracts

Author

Listed:
  • Marius Michels
  • Johannes Möllmann
  • Oliver Musshoff

Abstract

Purpose - Adoption rates of commodity futures contracts among farmers are rather low in Europe despite their political support. The purpose of this paper is to examine whether the Technology Acceptance Model (TAM) can contribute to the understanding of farmers’ intention to use commodity futures contracts. Here, the authors explicitly distinguish between usage motives for price risk reduction and speculation. Design/methodology/approach - The study is based on an online survey with 134 German farmers using partial least squares structural equation modeling to estimate the TAM. Findings - The intention to use commodity futures contracts is mostly driven by farmers’ motivation for speculation rather than price risk reduction. Assuming risk averse farmers, this result could explain low adoption rates. Furthermore, perceived ease of use has a positive effect on the intention to use commodity futures contracts. Practical implications - Handling of price hedging instruments should be facilitated to increase farmers’ adoption. Effective marketing trainings, which can demonstrate the ability of commodity futures contracts to reduce price risk, could increase farmers’ motivation to use them for their risk management instead of speculation. Originality/value - This study analyzes path relationships between constructs expected to influence the intention to use commodity futures contracts which are allowed to be estimated by the TAM in one model. Here, the authors explicitly distinguish between usage motives for price risk reduction and speculation. This is the first study applying the TAM to price risk management tools.

Suggested Citation

  • Marius Michels & Johannes Möllmann & Oliver Musshoff, 2019. "Understanding the intention to use commodity futures contracts," Agricultural Finance Review, Emerald Group Publishing Limited, vol. 79(5), pages 582-597, August.
    • Handle: RePEc:eme:afrpps:afr-02-2019-0025
    DOI: 10.1108/AFR-02-2019-0025
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    Citations

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    Cited by:

    1. Carlotta Penone & Elisa Giampietri & Samuele Trestini, 2021. "Hedging Effectiveness of Commodity Futures Contracts to Minimize Price Risk: Empirical Evidence from the Italian Field Crop Sector," Risks, MDPI, vol. 9(12), pages 1-14, December.
    2. 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.
    3. Eewoud Lievens & Kobe Tielens & Erik Mathijs, 2021. "Creating a market for price swaps: Case study of an innovative risk management instrument in the Belgian-Dutch pear market," Agricultural Economics, Czech Academy of Agricultural Sciences, vol. 67(1), pages 33-40.

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