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Risk-Efficient Marketing of Cotton: A Preliminary South Carolina Analysis

C.E. Curtis, Jr., S.E. Miller, V.F. Seamon


The volatility of cotton prices the past two decades has seen the need for many farmers to adopt marketing strategies designed to reduce risk in an attempt to produce returns necessary for firm survival. This paper looks at the expected returns and variation in returns of 31 common cotton marketing strategies used by South Carolina farmers from the 1988 through the 1994 crop years. The linear programming risk analysis model, target MOTAD (minimization of total absolute deviations), was employed to determine efficient cotton marketing strategies during the study period from the set of alter-natives examined. Risk-efficient portfolios were generated by minimizing absolute negative deviations below a target return level.

Reprinted from Proceedings of the 1996 Beltwide Cotton Conferences pp. 394 - 398
©National Cotton Council, Memphis TN

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Document last modified Sunday, Dec 6 1998