Do Farmers Hedge Optimally or by Habit? A Bayesian Partial-Adjustment Model of Farmer Hedging

Jeffrey Dorfman () and Berna Karali

No 37596, 2008 Conference, April 21-22, 2008, St. Louis, Missouri from NCCC-134 Conference on Applied Commodity Price Analysis, Forecasting, and Market Risk Management

Abstract: Hedging is one of the most important risk management decisions that farmers make and has a potentially large role in the level of profit eventually earned from farming. Using panel data from a survey of Georgia farmers that recorded their hedging decisions for four years on three crops we examine the role of habit, demographics, farm characteristics, and information sources on the hedging decisions made by 106 different farmers. We find that the role of habit varies widely. Information sources are shown to have significant and large effects on the chosen hedge ratios. The farmer's education level, attitude toward technology adoption, farm profitability, and the ratio of acres owned to acres farmed also play important roles in hedging decisions.

Keywords: Agricultural; Finance (search for similar items in EconPapers)
Pages: 18
Date: 2008
New Economics Papers: this item is included in nep-agr
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Citations: View citations in EconPapers (1)

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Related works:
Journal Article: Do Farmers Hedge Optimally or by Habit? A Bayesian Partial-Adjustment Model of Farmer Hedging (2010)
Journal Article: Do Farmers Hedge Optimally or by Habit? A Bayesian Partial-Adjustment Model of Farmer Hedging (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:ags:nccest:37596

DOI: 10.22004/ag.econ.37596

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