Crop Production Contracts and Marketing Strategies: What Drives Their Use?

Abstract

ABSTRACT Numerous crop marketing and risk management tools are available. Research relating producers’ risk attitudes to their use of these tools has produced mixed results, and most studies focus on individual tools, neglecting potential complementarities in information they provide. Little is known about the proportion in which individual tools are used, e.g., the percentage of the crop that is forward sold as opposed to hedged. This study identifies factors, including risk attitude, that impact the proportion of corn and soybean producers’ sales through spot markets, futures, and options, as well as forward and production contracts, and investigates contract complementarity and substitutability using survey and accounting data, and causal modeling.