Factors affecting the futures contract use by Brazilian coffee farmers

• Grant number: 09/15312-2
• Support Opportunities: Regular Research Grants
• Start date: February 01, 2010
• End date: January 31, 2012
• Field of knowledge: Applied Social Sciences - Economics
• Principal Investigator: Rodrigo Lanna Franco da Silveira
• Grantee: Rodrigo Lanna Franco da Silveira
• Host Institution: Instituto de Economia (IE). Universidade Estadual de Campinas (UNICAMP). Campinas , SP, Brazil

Abstract

The use of futures contract by Brazilian farmers as an instrument for price risk administration is very restricted. The causes of this situation cover aspects concerning farmer characteristics, preferences about the different instruments available to management the price risk, as well as psychological and institutional factors. The traditional models (mean-variance and expected utility), in general, do not consider these factors and, consequently, overestimate the position that the farmers effectually take. In this context, this study will investigate what the main factors that affects the futures contract use by Brazilian coffee farmers. Through interviews, will be analyzed if aspects such as age, experience, education, production size, knowledge about derivatives, oriented market degree, the existence of income in other activities, forward contracts use, risk aversion, risk perception, among others, influence in decision of use or not futures as a risk management technique. The study will use a logit model, which is suitable for modeling individual choice processes. (AU)