Factors Affecting Farmers' Hedging Decisions

Abstract Few farmers use futures markets in spite of theoretical research that says they should and educational efforts to get them to do so. This paper sought to determine the factors that explain why a sample of Indiana farmers use futures markets. Survey results showed that on average futures markets were perceived to both reduce risk and increase income. The most important factors explaining the use of futures markets were the individual's perception of the ability of futures markets to reduce risk and the individual's debt position.