Modelling Preferences of South African Grain Farmers for Adopting Derivative Contracts Using Discrete Choice Models
Rangan Gupta () and
Additional contact information
Elizabeth Ueckermann: Department of Economics, University of Pretoria
No 200705, Working Papers from University of Pretoria, Department of Economics
The authors of the present paper apply a discrete choice model to determine specific characteristics that influence South African grain farmers’ preferences in hedging against uncertainties. This is the first empirical study conducted in the country regarding such preferences of producers for adopting derivative contracting based on the survey data of Grain South Africa for the year 2006. By means of the application of separate binary logit models for each major grain commodity, this paper establishes that different grain farmers are significantly heterogeneous. The results also indicate that the preferences of grain farmers for adopting derivative contracting are mostly influenced by the farmers’ preference towards prediction of daily grain prices and market trends, farm size and geographic characteristics. From a policy perspective it has been indicated that the problems concerning food and income insecurity will be reduced if farmers can adopt derivative contracting on a large scale since the producers will then be able to produce the staple food on a continuous basis at a relatively profitable level.
Keywords: Discrete choice models; Micro analysis of farmers; Agricultural markets & marketing (search for similar items in EconPapers)
JEL-codes: C25 Q12 Q13 (search for similar items in EconPapers)
Pages: 15 pages
References: Add references at CitEc
Citations: Track citations by RSS feed
There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:pre:wpaper:200705
Access Statistics for this paper
More papers in Working Papers from University of Pretoria, Department of Economics Contact information at EDIRC.
Bibliographic data for series maintained by Rangan Gupta ().