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Evidence of Farmer Forward Pricing Behavior

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  • McNew, Kevin
  • Musser, Wesley

Abstract

The current agricultural marketing literature has considerable controversy about the optimal use of hedging for farmers. Much of this literature has very limited data on farmer behavior and an evaluation of the outcome of this behavior. This paper uses data from a hedging game from marketing clubs in Maryland for 1994-1997. Results indicate that farmers do not achieve price enhancement from hedging. However, their decisions do not conform to implications of optimal hedging models in a number of dimensions. Hedge ratios are near the optimal levels under one interpretation. The paper also provides research and extension implications of the results.

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Handle: RePEc:ags:nc8191:285751
DOI: 10.22004/ag.econ.285751
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