Factors Influencing Cotton Producers' Choice of Marketing Outlet

Recent changes in farm programs, cotton supply and demand fundamentals, and cotton price patterns have likely shifted how producers market their cotton. This paper examines cash marketing choices by southwestern cotton producers in 2010. Hedging is included an explanatory variable, along with other independent variables studied in previous research. Producer marketing behavior was modeled in a multinomial logit framework as a discrete choice among forward contracting with a merchant, post-harvest cash contracting with a merchant, contracting with a merchant pool, or contracting with a cooperative pool. 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.