USE OF MAIZE MARKETING ALTERNATIVES AND PRICE RISK MANAGEMENT TOOLS BY COMMERCIAL MAIZE FARMERS IN SOUTH AFRICA

A.N. Bown, G.F. Ortmann and M.A.G. Darroch

Agrekon, 1999, vol. 38, issue 3

Abstract: The demise of the Maize Board in South Africa in 1997 placed responsibility for maize marketing in the hands of individual producers. Given the inelastic nature of maize supply and demand, these farmers now face considerable price risk. In the absence of the Maize Board, price risk management mechanisms have evolved to serve maize farmers. Results of a postal survey of commercial maize producers in 1998 indicate that maize farmers are making increased use of the forward contracting market relative to the spot market. The percentage of respondents using SAFEX increased markedly over a three-year period, the hedging ratio rising from 27 percent in 1997/98 to reach 49 percent for 1998/99 and 1999/2000. Survey respondents were divided into lower- and higher- level users of price risk management tools, based on their scores for an index of price risk management. Higher-level users tended to operate larger farms, and be younger, less experienced, but more educated, computeradopting operators who were less likely to individually own their operations. Farmers perceived their marketing management skills to be relatively weak. Maize marketing education seminars and magazine articles explaining available marketing alternatives could increase farmers’ use of price risk management tools. Further research opportunities lie in the estimation of optimal hedging ratios in a South African context and the monitoring of farmers’ marketing activities as the maize market matures.

Keywords: Crop Production/Industries; Demand and Price Analysis; Marketing (search for similar items in EconPapers)
Date: 1999
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

Downloads: (external link)
https://ageconsearch.umn.edu/record/245972/files/02%20Bown%20Sept%201999.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ags:agreko:245972

DOI: 10.22004/ag.econ.245972

Access Statistics for this article

More articles in Agrekon from Agricultural Economics Association of South Africa (AEASA) Contact information at EDIRC.
Bibliographic data for series maintained by AgEcon Search ().