Evaluation of a Quantitative Procedure to Select Among Alternative Marketing Strategies to Reduce Price Risks of Stocker Operators*

James H. Davis and John R. Franzmann

Journal of Agricultural and Applied Economics, 1973, vol. 5, issue 2, 63-71

Abstract: Producers within the cattle industry are faced with three major types of risks: (1) risks of losses in quality; (2) risks of quantity losses; and (3) losses resulting from unfavorable changes in cash prices. Quality and quantity risks are physical risks that can be dealt with through managerial techniques, adoption of new technology, and the use of fire, storm, and theft insurance. The risk associated with unfavorable price changes does not lend itself to an insurance approach. Producers must, therefore, become speculators in the cash market or choose to employ marketing strategies designed to transfer price risks to other market functionaries.

Date: 1973
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