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Marketing contracts and risk management for cereal producers

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  • Caroline Roussy
  • Aude Ridier
  • Karim Chaib
  • Marie Boyet

Abstract

French specialized durum wheat farmers are subject to market risks (price volatility), production risks (fluctuating quality and yields), and an increasingly restrictive regulatory environment (limits on inputs). The purpose of this paper is to gain a more in‐depth understanding of the strategies used by those farmers to manage these risks by analysing portfolio strategies in marketing methods and in production decisions. The findings show that three main categories of marketing methods can be adopted in different proportions: forward contracts, average price contracts and spot market selling. A hundred farmers are surveyed in South‐West France. An empirical analysis of the determinants of their marketing methods show that risk perceptions and the farmer's level of education influence the choice to sign a preharvest contract for part of their production. In addition, agricultural diversification is negatively correlated with the choice to use forward contracts to hedge against market risk. [EconLit citations: Q13, L24, C24].

Suggested Citation

  • Caroline Roussy & Aude Ridier & Karim Chaib & Marie Boyet, 2018. "Marketing contracts and risk management for cereal producers," Agribusiness, John Wiley & Sons, Ltd., vol. 34(3), pages 616-630, June.
    • Handle: RePEc:wly:agribz:v:34:y:2018:i:3:p:616-630
    DOI: 10.1002/agr.21549
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    Cited by:

    1. Julia Jouan & Aude Ridier & Matthieu Carof, 2019. "Economic Drivers of Legume Production: Approached via Opportunity Costs and Transaction Costs," Sustainability, MDPI, vol. 11(3), pages 1-14, January.
    2. Angelo Frascarelli & Stefano Ciliberti & Gustavo Magalhães de Oliveira & Gabriele Chiodini & Gaetano Martino, 2021. "Production Contracts and Food Quality: A Transaction Cost Analysis for the Italian Durum Wheat Sector," Sustainability, MDPI, vol. 13(5), pages 1-12, March.
    3. Stefano Ciliberti & Simone Del Sarto & Angelo Frascarelli & Giulia Pastorelli & Gaetano Martino, 2020. "Contracts to Govern the Transition towards Sustainable Production: Evidence from a Discrete Choice Analysis in the Durum Wheat Sector in Italy," Sustainability, MDPI, vol. 12(22), pages 1-14, November.
    4. Aymeric Ricome & Arnaud Reynaud, 2022. "Marketing contract choices in agriculture: The role of price expectation and price risk management," Agricultural Economics, International Association of Agricultural Economists, vol. 53(1), pages 170-186, January.
    5. Awal Abdul‐Rahaman & Awudu Abdulai, 2020. "Vertical coordination mechanisms and farm performance amongst smallholder rice farmers in northern Ghana," Agribusiness, John Wiley & Sons, Ltd., vol. 36(2), pages 259-280, April.
    6. Bignebat, C., 2018. "Learning process in marketing contract choice: the case of cereals in the Paris Basin," 2018 Conference, July 28-August 2, 2018, Vancouver, British Columbia 277233, International Association of Agricultural Economists.
    7. Carlotta Penone & Elisa Giampietri & Samuele Trestini, 2024. "Exploring farmers’ intention to adopt marketing contracts: empirical insights using the TOE framework," Agricultural and Food Economics, Springer;Italian Society of Agricultural Economics (SIDEA), vol. 12(1), pages 1-19, December.

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