Cotton Producers’ Choice of Marketing Techniques

Authors

Oscar Vergara, AIR Worldwide Corporation
Keith H. Coble, Mississippi State UniversityFollow
Thomas O. Knight, Texas Tech UniversityFollow
George F. Patrick, Purdue University, West Lafayette, Indiana
Alan Baquet, University of Nebraska-LincolnFollow

Document Type

Article

Date of this Version

1-1-2004

Comments

Published in Agribusiness 20:4 (2004), pp. 465–479; doi 10.1002/agr.20023 Copyright © 2004 Wiley Periodicals, Inc. Used by permission. http://www.interscience.wiley.com/jpages/0742-4477

Abstract

A survey of cotton producers was conducted in Mississippi and Texas. The econometric model consists of a multinomial logit model of cotton producers’ choice of marketing techniques. The results indicate that cotton acres positively influence pooling and negatively influence cash sales. Producers willing to incur higher transaction costs in market information systems and training tend to choose futures/options contracts and forward pricing. It was found that risk-averse producers tend not to choose pooling contracts. On the other hand, producers who seek abnormal gains through speculation tend to choose pooling contracts. Finally, producers who perceive markets as being price-efficient prefer cash sales.