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Few farmers use hedging to market their crops despite theoretical models that suggest high optimal hedge ratios and significant risk management education efforts. This study provides an analysis of factors that motivate cotton farmers to select hedging as their primary marketing strategy. The most important factors that explain the use of hedging by cotton producers were crop insurance, producer preferences, farm size and membership in marketing cooperatives. Income from government payments, off-farm income, and risk aversion also had an impact on the choice of the primary marketing strategy. |
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©National Cotton Council, Memphis TN |
Document last modified XXXXXX, XXX XX 2001
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