A Comparison of Marketing Strategies for Potatoes in Upstate New York

A long-standing problem in agricultural marketing is the question of "optimal" marketing patterns for a seasonally produced crop. When futures markets exist, agricultural economists have often recommended their use to improve marketing decisions, but farmer use of futures as an aid to marketing is not common. This paper considers the potential benefits to upstate New York farmers of hedging using Maine potato futures contracts. Benefits are defined in terms of the mean and variance of returns from alternative marketing strategies for potatoes. A portfolio approach is implicit in the analysis which also relies, in part, on the formulation of a simple price-forecasting model.