Original Research

Factors affecting the use of price risk management tools by large commercial maize producers in South Africa

A. Brown, G. F. Ortmann, M. A.G. Darroch
South African Journal of Economic and Management Sciences | Vol 3, No 1 | a2600 | DOI: https://doi.org/10.4102/sajems.v3i1.2600 | © 2018 A. Brown, G. F. Ortmann, M. A. Darroch | This work is licensed under CC Attribution 4.0
Submitted: 04 July 2018 | Published: 31 March 2000

About the author(s)

A. Brown, School of Agricultural Sciences and Agribusiness, University of Natal, South Africa
G. F. Ortmann, School of Agricultural Sciences and Agribusiness, University of Natal, South Africa
M. A.G. Darroch, School of Agricultural Sciences and Agribusiness, University of Natal, South Africa

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Abstract

Ordinary Least Squares regression was used to examine what characteristics affect the use of maize price risk management tools by a sample of large commercial South African maize producers in 1998. The use of maize storage facilities, off-farm employment, formal crop insurance, length of formal education of operators and the proportion of farm turnover from maize, all positively influence producers' use of these tools. Crop insurance thus appeared to be a complementary method of risk management. In contrast to previous United States studies, operators' self-rated score of marketing management ability was negatively related to the use of price risk management tools. Maize marketing seminars and other sources of information on managing price risk would reduce adoption costs and encourage broader producer participation

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