STOCHASTIC EFFICIENCY ANALYSIS OF ALTERNATIVE BASIC MAIZE MARKETING STRATEGIES

D.B. Strydom, Bennie Grove, Y. Kruger and B.J. Willemse

No 96812, 2010 AAAE Third Conference/AEASA 48th Conference, September 19-23, 2010, Cape Town, South Africa from African Association of Agricultural Economists (AAAE)

Abstract: The use of modern marketing strategies to minimize risk exposure is not a widely adopted practice under maize producers. The producers tend to use high risk strategies which include the selling of the crop on the cash market after harvested; while the current market requires innovative strategies including the use of Futures and Options as traded on SAFEX. However, due to a lack of interest and knowledge of producers understanding of modern, complicated strategies the study illustrates by using a SERF and CDF that the use of three basic strategies namely a Put-, Twelve-segment-, Three-segment- can be more rewarding. These strategies can be adopted by farmers without an in-depth understanding of the market and market-signals. The results obtained from the study illustrates that producers who tend to be more risk neutral would prefer using the Twelve-segment- or Spot-strategy while a risk averse producer would prefer the Three-segment-, or Put-strategy. It also indicates that no strategy can be labelled as the all-time best and that the choice between strategies depends on risk adverse characteristics of the producer. The purpose of the study is to prove that the adoption of a basic strategy is better than adopting no strategy at all and to convince producers to reconsider the adoption of modern marketing strategies.

Keywords: Crop Production/Industries; Marketing (search for similar items in EconPapers)
Pages: 21
Date: 2010-09
New Economics Papers: this item is included in nep-agr and nep-mkt
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Persistent link: https://EconPapers.repec.org/RePEc:ags:aaae10:96812

DOI: 10.22004/ag.econ.96812

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