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Marketing Choices by Texas Cotton Growers

Author

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  • Pace, Jason D.
  • Robinson, John R. C.

Abstract

Recent changes in farm programs, cotton supply and demand fundamentals, and cotton price patterns have likely shifted how producers market their cotton. This paper examines cash marketing choices by southwestern cotton producers in 2010. Hedging is included an explanatory variable, along with other independent variables studied in previous research. Producer marketing behavior was modeled in a multinomial logit framework as a discrete choice among forward contracting with a merchant, post-harvest cash contracting with a merchant, contracting with a merchant pool, or contracting with a cooperative pool. Data were collected from a mail survey of the population of cotton growers in Texas, Oklahoma and Kansas. The most important determinants of cotton cash marketing choices were 1) prior participation in cooperative pools, beliefs about the value of pre-harvest pricing, beliefs about the performance of merchant pools, willingness to accept lower prices to reduce risk, and several socio-economic variables.

Suggested Citation

  • Pace, Jason D. & Robinson, John R. C., 2012. "Marketing Choices by Texas Cotton Growers," 2012 Conference, April 16-17, 2012, St. Louis, Missouri 285772, NCR-134/ NCCC-134 Applied Commodity Price Analysis, Forecasting, and Market Risk Management.
    • Handle: RePEc:ags:n13412:285772
    DOI: 10.22004/ag.econ.285772
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    References listed on IDEAS

    as
    1. Isengildina, Olga & Hudson, Darren, 2001. "Factors Affecting Hedging Decisions Using Evidence from the Cotton Industry," 2001 Conference, April 23-24, 2001, St. Louis, Missouri 18970, NCR-134 Conference on Applied Commodity Price Analysis, Forecasting, and Market Risk Management.
    2. Oscar Vergara & Keith H. Coble & Thomas O. Knight & George F. Patrick & Alan E. Baquet, 2004. "Cotton producers' choice of marketing techniques," Agribusiness, John Wiley & Sons, Ltd., vol. 20(4), pages 465-479.
    3. Coble, Keith H. & Heifner, Richard G. & Zuniga, Manuel, 2000. "Implications Of Crop Yield And Revenue Insurance For Producer Hedging," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 25(2), pages 1-21, December.
    4. Gregory D. Wozniak, 1987. "Human Capital, Information, and the Early Adoption of New Technology," Journal of Human Resources, University of Wisconsin Press, vol. 22(1), pages 101-112.
    5. Harvey Lapan & Giancarlo Moschini, 1994. "Futures Hedging Under Price, Basis, and Production Risk," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 76(3), pages 465-477.
    6. Janzen, Joseph P. & Smith, Aaron D., 2012. "Commodity Price Comovement: The Case of Cotton," 2012 Conference, April 16-17, 2012, St. Louis, Missouri 285766, NCR-134/ NCCC-134 Applied Commodity Price Analysis, Forecasting, and Market Risk Management.
    7. Joost M.E. Pennings & Raymond M. Leuthold, 2000. "The Role of Farmers' Behavioral Attitudes and Heterogeneity in Futures Contracts Usage," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 82(4), pages 908-919.
    8. Shapiro, B. I. & Brorsen, B. Wade, 1987. "Factors Influencing Farmers' Decisions of Whether or Not To Hedge," 1981-1999 Conference Archive 285460, NCR-134/ NCCC-134 Applied Commodity Price Analysis, Forecasting, and Market Risk Management.
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