Commercial Farmers' Choice Amongst Maize Marketing Alternatives in South Africa

Anthony Bown, Gerald Ortmann and Mark Oarroch

No 346528, 12th Congress, Durban, South Africa, July 18-24, 1999 from International Farm Management Association

Abstract: The demise of the Maize Board in South Africa has placed responsibility for maize marketing in the hands of individual producers, who nowface more price risk. In response, farmers and the private sector have developed price risk management mechanisms. Results of a postal survey of maize producers in the major maize producing regions of South Africa indicate that maize farmers are making increased use of the forward contracting market relative to the spot (cash) market. Farmers’ direct use of the South African Futures Exchange (SAFEX) has also increased markedly. Most respondents used a portfolio of marketing channels. Elevators (cooperatives and former cooperatives) continue to handle the highest proportion of the maize crop in the study areas. The marketing role of large traders looks set to increase further, as does on-farm use of maize by producers. Futures hedging ratios for sample fanners were below those levels suggested in the literature on optimal hedging This may he due to farmers ’ use of other risk management tools as substitutesfor hedging. There is a needfor further research to estimate recommended hedging ratios for South African maize farmers. 'There is scope for marketing-focused seminars and programmes to further educate farmers on the use of alternative maize marketing channels. Analysis of respondents’ business and personal characteristics showed that higher-level users of price risk management tools tended to operate largerfarms, and be marginally younger and less experienced, but more educated, computer-adopters who were more likely to individually own their operations.

Keywords: Crop Production/Industries; Marketing (search for similar items in EconPapers)
Pages: 14
Date: 1999
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Persistent link: https://EconPapers.repec.org/RePEc:ags:ifma99:346528

DOI: 10.22004/ag.econ.346528

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