Factors affecting the types of sales contracts of agricultural products (Case Study: Cotton product in the city of Gonbad-e Kavus)

Document Type : Research Paper

Authors

• F. Sakhi ¹
• H. Mohammadi ²
• A. Fatahi Ardakani ³

¹ Ph.D. Student, Department of Agricultural Economics, Faculty of Agriculture and Natural Resources, Tehran University. Tehran, Iran.

² Associate Professor, Department of Agricultural Economics, Faculty of Agriculture, University of Ferdowsi Mashhad.

³ Associate Professor, Department of Agricultural Economics, Faculty of Agriculture, University of Ardakan, Yazd

Abstract

The aim of study was to investigate the factors influencing the choice of the type of contract of sale of cotton by farmers in the city of Gonbad-e Kavus in Golestan province. The sample of 200 farmers was randomly selected for the study and cross-sectional data were collected using the questionnaires and interviews. To achieve the above-mentioned purposes, the multinomial logistic regression is used. The results of this study showed that in the cross-sectional 2014-2015, common contracts for sales of the cotton product were including Cash, Amani, and Forward contracts. Also, 42%, 36% and 22% of cotton farmers sold their cotton by Cash, Amani, and Forward contracts respectively. Also the results of the multinomial logistic regression showed that marketing agents, the risk perception cotton market index, and risk aversion index variables have a significant positive effect on the choice of the type of Amani and Forward contracts than cash contract and on the other hand education level, work experience in agriculture, farm ownership, cotton acreage, non-farm income, and precautionary savings variables have a significant negative.

Keywords

• Cotton product
• Factor Analysis
• Moltinominal logit Model

20.1001.1.20086407.1399.12.45.1.1

---

References

Abebe, G.K., Bijman, J., Kemp, R., Omta, O., & Tsegaye, A. (2013). Contract farming configuration: Smallholders’ preferences for contract design attributes. J. Food Policy. 40: pp. 14–24.

- Adanacioglu, H. (2011). The Futures Market in Agricultural Products and an Evaluation of the Attitude of Farmers: A Case Study of Cotton Producers in Aydin Province in Turkey. J. Agricultural Economics. 1: pp. 58-64.

- Anderson, J.R. )2003(. Impacts of climate variability in Australian agriculture. J. Review of Marketing and Agricultural Economics. 49 (31): pp. 147-177.

- Anderson, T. W. (1958). Introduction to Multivariate Statistical Analysis, John Wiley and Sons, New York.

- Ben-Akiva, M., & Lerman, S. (1985). Discussion Choice Analysis: theory and applications travel demand. MIT Press, Cambridge, MA.

- Franken, J.R.V., Pennings, J.M.E., & Garcia, P. (2012). Crop Production Contracts and Marketing Strategies: What Drives Their Use?. J. Agribusiness. 28(3): pp. 324–340.

- Ghorbani, M., and Kulshreshtha, S. (2013). An Environmental and Economic Perspective on Integrated Weed Management in Iran. J. Weed Science Society of America. 27(2): pp. 352-361.

- Goodwin, B.K., & Schroeder, T.C. (1994). Human capital, producer education programs, and adoption of forward pricing methods. J. Agricultural Economics. 76: pp. 936-947.

- Isengildina, O., & Hudson, M.D. (2001). Factors affecting hedging decisions using evidence from the cotton industry. Conference on applied commodity price analysis, forecasting, and market risk management, April 23-24.

- Jordaan, H., & Grove, B. (2007). Factors affecting maize producers adoption of forward pricing in price risk management: The Case of Vaalharts. J. Agrekon. 46(4): pp. 548-565.

- Jordaan, H., & Grové, B. (2008). Factors affecting the use of forward pricing methods in price risk management with special reference to the influence of risk aversion. J. Agrekon. 46(1): pp.102-115.

- Katchova, A.L., & Miranda, M.J. (2004). Two-step econometric estimation of farm characteristics affecting marketing contract decisions. J. Agricultural Economics. 86: pp. 88–102.

- Long, J.S. (1997). Regression Models for Categorical and Limited Dependent Variables. SAGE Publications, Inc. London EC2A 4PU, United Kingdom.

- Makus, L.D., Lin, B.H., Carlson, J. & Krebill-Prather, R. (1990). Factors influencing farm level use of futures and options in commodity marketing. J. Agribusiness. 6: pp. 621-631.

- Mishra, A.K., & El-Osta, H.S. (2002). Managing risk in agriculture through hedging and crop insurance: What Does a National Survey Reveal?. J. Agricultural Finance Review. 2: pp.136-148.

- Mishra, A.K., Kumar, A., Joshi, P., & Dsouza, A. (2016). Impact of contracts in high yielding varieties seed production on profits and yield: The case of Nepal. J. Food Policy. 62 : pp. 110–121.

- Mofokeng, M., & Vink, N. (2013). Factors affecting the hedging decision of maize farmers in Gauteng Province. International Conference of the African Association of Agricultural Economists, September 22-25.

- Musser, W.N., Patrick, G.F., & Eckman, D.T. (1996). Risk and grain marketing behavior of large-scale farmers. J. Review of Agricultural Economics. 18: pp. 65–77.

- Pedhazur, E.J. (1982). Multiple Regression in Behavioral Research: Explanation and prediction. New York.

- Pennings, J.M.E., & Garcia, P. (2001). Measuring producers’ risk preferences: Aglobal risk attitude construct. J. Agricultural Economics. 83: pp. 993–1009.

- Pennings, J.M.E., & Leuthold, R.M. (2000). The role of farmers’ behavioral attitudes and heterogeneity in futures contracts usage. J. Agricultural Economics. 82: pp. 908–919.

- Pennings, J.M.E., & Smidts, A. (2000). Assessing the Construct Validity of Risk Attitude. J. Manage. 46: pp.13-48.

- Reynaud, A., & Ricome, A. (2010). An Empirical Analysis of the Determinants of Marketing Contract Choices in France. RENNES, France, 9-10 decembre.

- Sartwelle, J., O’Brien, D., Tieney, W., & Eggers, T. (2000). The effect of personal and farm characteristics upon grain marketing practices. J. Agricultural and applied Economics. 32(1): pp. 95-111.

- Shapiro, B.I., & Brorsen, B.W. (1988). Factors affecting farmers’ hedging decisions. J. North Central Agricultural Economics. 10: pp. 145-153.

- Velandia, M., Rejesus, R.M., Knight, T.O., & Sherrick, B.J. (2009). Factors affecting farmers’ utilization of agricultural risk management tools: The Case of Crop Insurance, Forward Contracting, and Spreading Sales. J. Agricultural and Applied Economics. 41: pp. 107–123.

- Yazdani, S., Shahbazi, H., & Kavusi, M. (2010). Evaluation of function production and budget constraint in the production of cotton in Khorasan. Agricultural Economics and Development Research. 2(4): pp. 425-433.