Factors Affecting Cotton Producers' Choice of Marketing Outlet

• Main Author: Pace, Jason 1979-
• Other Authors: Robinson, John R
• Format: Others
• Published: 2013
• Subjects: multinomial logistic regression; grower marketing choices; cotton marketing
• Online Access: http://hdl.handle.net/1969.1/148089

In recent years, changes in government policies, supply and demand fundamentals and price patterns in the cotton market have led to several shifts in how producers market their cotton. This thesis examined producer cash marketing choices, including direct and indirect hedging, in four different periods since 2001. Special emphasis was placed on the 2010 season - a season characterized by historically high prices and volatility. Producer marketing behavior was modeled as a discrete choice between four different cash market outlets: forward contracting with a merchant, post-harvest cash contracting, contracting with a merchant pool and contracting with a cooperative pool. Hedging was characterized as a tool that was used in conjunction with one of the four discrete choices. This thesis employed multinomial logit estimation to determine the influence of factors on producers' choice of primary cash marketing decisions. Data were collected from a mail survey of the population of cotton growers in Texas, Oklahoma and Kansas. The most important determinants of cotton cash marketing choices were 1) prior participation in cooperative pools, beliefs about the value of pre-harvest pricing, beliefs about the performance of merchant pools, willingness to accept lower prices to reduce risk, and several socio-economic variables.