Agricultural Marketing

Pursuant to a legislative requirement, GAO studied: (1) farmers' use of three advanced marketing techniques, specifically cash-forward contracting, hedging in the futures market, and trading in agricultural options; and (2) educational programs in advanced agricultural marketing techniques.

GAO found that: (1) although producers could use advanced marketing techniques to ensure commodity prices at a future date, they face such risks as lost opportunities if prices rise, added option premium expenses, and potential liability for failure to deliver the contract product quantity; (2) producers participating in government price-support programs had little interest in marketing techniques; (3) futures contracts required standard quantities that some small- and medium-sized farms were capable of producing; (4) studies showed that only 5 to 13 percent of the total producers used futures contracts to market their products, while most producers used cash-forward contracting agreements; and (5) although studies showed the number of producers that could effectively use advanced marketing techniques, they indicated that futures trading provided fewer benefits to smaller producers. GAO also found that: (1) advanced marketing education programs provided practical knowledge to producers and encouraged them to implement that knowledge; (2) between May 1986 and April 1987, 25,000 individuals attended advanced marketing programs, and producers represented 82 percent of those attending; and (3) many of the entities that provided formal education workshops used alternative methods, such as home-study courses, videotapes, and marketing clubs, and provided marketing information through newspapers, radio, television, and other sources.