Human Capital, Producer Education Programs, and the Adoption of Forward‐Pricing Methods

Abstract

Using a sample of 509 Kansas producers, we evaluate factors affecting adoption of forward pricing methods. We focus on producers' human capital accumulation and its effect on adoption of forward‐pricing techniques. Probit models are employed to evaluate producers' participation in educational programs and their forward‐pricing adoption decisions. Tobit models are employed to evaluate individual levels of adoption of these techniques in the marketing of wheat, corn, grain sorghum, soybeans, and cattle.

Factors Affecting Maize Producers Adoption of Forward Pricing in Price Risk Management: The Case of Vaalharts

“…The negative sign of the coefficient of the yield risk premium variable is of interest since it implies that the more risk averse a producer is, the less likely he/she is to use forward pricing methods to manage price risk. The negative influence is consistent with the findings of Shapiro & Brorsen (1988); Goodwin & Schroeder (1994); Musser et al (1996);and Sartwelle et al (1999). Isengildina & Hudson (2001), however, found the relationship to be positive.…”

“…Goodwin & Schroeder (1994) argue that a more educated farmer is more likely to adopt a new technology and thus, to use forward pricing methods. The yield risk premium of the farmer is also expected to have a positive influence on the use of forward pricing methods since risk aversion becomes the primary motive for farmers to use forward markets (McNew & Musser, 2000).…”

“…Some studies, however, did find higher adoption rates. Goodwin & Schroeder (1994) found that 45% of their respondents used cash forward contracts. Sartwelle et al (2000) found that 70% of their respondents used cash forward contracts and 52% used futures and options.…”

Assessment of Risks and Uncertainties in Poultry Farming in Kwara State, Nigeria

“…This is in line with the notion that well-educated producers have the human capital to more fully comprehend and utilize the nuances of effectively utilizing risk management strategies (Goodwin and Schroeder, 1994;Smith and Baquet, 1996;Mishra and El-Osta, 2002;Ayinde, 2008;Margerita et al, 2009). …”

U.S. Crop Farmers' Use of Market Advisory Services

“…A total of 56 % of the respondents reported that they also had livestock in their farm operation. This group of farmers appears similar to commercial farmers described in previous surveys in terms of age (43 years in Shroeder et al, 1998) and farm size (1,732-1,450 acres in Patrick, et al, 1996; an average of 1,572 acres in Goodwin and Schroeder, 1994;and $473,850 average gross income in Coble, et al, 1999). The respondents to the survey were similar to participants of the Coble et al (1999) survey in terms of their usage of futures and options contracts, with about 30 percent of producers reporting the use of these forward pricing tools.…”