Marketing contracts and risk management for cereal producers

Caroline Roussy, Aude Ridier, Karim Chaib and Marie Boyet

Agribusiness, 2018, vol. 34, issue 3, 616-630

Abstract: French specialized durum wheat farmers are subject to market risks (price volatility), production risks (fluctuating quality and yields), and an increasingly restrictive regulatory environment (limits on inputs). The purpose of this paper is to gain a more in‐depth understanding of the strategies used by those farmers to manage these risks by analysing portfolio strategies in marketing methods and in production decisions. The findings show that three main categories of marketing methods can be adopted in different proportions: forward contracts, average price contracts and spot market selling. A hundred farmers are surveyed in South‐West France. An empirical analysis of the determinants of their marketing methods show that risk perceptions and the farmer's level of education influence the choice to sign a preharvest contract for part of their production. In addition, agricultural diversification is negatively correlated with the choice to use forward contracts to hedge against market risk. [EconLit citations: Q13, L24, C24].

Date: 2018
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https://doi.org/10.1002/agr.21549

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Persistent link: https://EconPapers.repec.org/RePEc:wly:agribz:v:34:y:2018:i:3:p:616-630

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