Reynaud, Arnaud and Ricome, Aymeric (2022) Marketing contract choices in agriculture: the role of price expectation and price risk management. Agricultural Economics, vol. 53 (n° 1). pp. 170-186.

Abstract

We identify factors involved in the decision of farmers to use marketing contracts (pool, storage and forward contracts), and we explicitly account for the hedging and price-enhancement components of this decision. Using panel corner solution models (Tobit and double-hurdle) to represent farmers' contracting decision using a sample of French cereal producers, we find that both the hedging and the price-enhancement motives are important factors driving marketing choices. When risk aversion or exposure to price risk rises, the price-enhancement motive becomes less influential. Farmers appear to be more reluctant to base their marketing decisions on their price expectations in that case.