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Influence of farmers’ behavioral attitudes on hedging decisions

Rodrigo Lanna Franco da Silveira (Department of Economics, University of Campinas, Campinas, Brazil)
Alexandre Gori Maia (Department of Economics, University of Campinas, Campinas, Brazil)
José César Cruz Júnior (Department of Economics, Federal University of São Carlos, São Carlos, Brazil)
Maria Sylvia Macchione Saes (Department of Business, University of São Paulo, São Paulo, Brazil)

Academia Revista Latinoamericana de Administración

ISSN: 1012-8255

Article publication date: 3 November 2014




The purpose of this paper is to analyze the factors, including behavior, that impact the knowledge and use of futures contracts among Brazilian coffee producers. The results are based on primary data obtained from a sample of 244 farmers.


A multinomial logistic regression model is adjusted to analyze the determinants of the producers’ choices.


The results show that behavioral variables play an important role in the decision to use futures contracts: risk propensity, self‐confidence in management, and the level of market monitoring. Variables such as education and crop size also factor into this decision.

Research limitations/implications

A limitation of this study is that the analysis of farmers’ decisions and behavior was limited to one year. Future research which examines a more comprehensive group of producers over a longer period can reveal in more detail the determining factors for the use of futures contracts as a price risk management tool in the coffee market.


The paper is the first to interview Brazilian coffee producers about their hedging decisions on a large scale. The main contributions this paper makes to the literature are the inclusion of behavioral variables in its analysis that will prove valuable in both future research and in the investment industry.


Este trabalho avalia os principais fatores, incluindo aspectos relativos ao comportamento, que interferem no conhecimento e respectivo uso de contratos futuros entre produtores de café no Brasil. Os resultados baseiam‐se em dados primários obtidos de uma amostra de 244 agricultores das principais regiões produtores de café no Brasil. Um modelo de regressão logística multinomial é ajustado para analisar os determinantes das múltiplas escolhas dos produtores. Entre os principais resultados do trabalho, destaca‐se o fato de as variáveis comportamentais cumprirem um importante papel na determinação da decisão do uso de contratos futuros, em especial a propensão ao risco, o grau de confiança na gestão e grau de acompanhamento do mercado. Além disso, variáveis como escolaridade do produtor e tamanho da produção se mostraram significativas.



The authors thank the support provided by Fapesp (São Paulo Research Foundation) for the development of research.


da Silveira, R.L.F., Gori Maia, A., Cruz Júnior, J.C. and Macchione Saes, M.S. (2014), "Influence of farmers’ behavioral attitudes on hedging decisions", Academia Revista Latinoamericana de Administración, Vol. 27 No. 3, pp. 355-365.



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