Author: John Williams

Publisher:

Published: 2009

Total Pages: 250

ISBN-13:

Previous research that attempted to evaluate Australian farmers' decision-making in a high risk environment has often been inconclusive and contradictory. The risks associated with wheat production, marketing, and hedging/pricing are high in Australia due to irregular rainfall, distance from major markets, and difficulties with suitable hedging benchmarks. Much of the overseas research has limited value to Australia because of higher farming risks, deregulated markets, no price/ income protection policies, and no public underwriting of risks. There have been few in-depth studies that have examined relevant marketing methods and hedging strategies from a behavioural decision-making perspective in a deregulated market. In this research, the Fisher Exact Test (a variation of the Chi-square test) analysed five marketing strategies and six hedging/pricing methods used by wheat growers, across eighteen key management factors and seventeen risk attitude/adoption characteristics in NSW for the 2005 production year, with the results compared with South Australia and Victoria. The findings were then used to examine eight research questions relating to decision-making. Different management approaches by Australian wheat growers were found to affect marketing decision-making more than hedging decision-making which was more influenced by risk perception. Cash flow might be a greater contributing factor leading to emotional anxiety than either the marketing method or hedging strategy. Growers were more likely to perceive that knowledge of variable costs of production led to price risk management, and were also more likely to perceive that they target more realistic price levels when variable costs are known. Alternatively, price risk management was an incentive to lower variable costs of production. A wheat grower's farm size, debt, and farming experience influenced the choice of marketing method or hedging strategy, whilst age did not, while the impact of training was inconclusive. Regret and avoidance in decision-making was high for wheat growers. Rogers' adoption criteria have some influence on decision-making. There was much evidence to support the application of the Kahneman and Tversky's 'certainty effect' proposition to Australian wheat growers.