Marketing Performance of Oklahoma Farmers

Relative to marketing most agricultural commodities, the dominant academic paradigm is the efficient market hypothesis that suggests that little profits can be made by trying to time when to sell wheat. The paradigm says that farmers will, on average, receive an average price. A view that has been expounded at Cooperative Extension meetings and in farm press articles is that most farmers receive a below average market price. For example, at a recent Farm Bureau meeting, the master of ceremonies made the statement, “producers tend to sell on the bottom third of the market.” Also, in a mid-March 2001 issue of the Progressive Farmer ,D r. G.A. Barnaby from Kansas State University was quoted as saying, “Maybe that’s why most farmers sell in the bottom third of the market” (Batchelor, p. 25). 1 The research question then is do farmers really sell in the bottom third of the market or is this just a clever marketing gimmick by market advisory services? The idea of farmers selling in the bottom third of the market is not without theoretical foundation. Results from behavioral finance find that people have systematic psychological biases (Brorsen and Anderson). These biases could result in herding behavior in such a way that the majority could always be wrong. A study by Slusher, based on a narrow survey of Indiana corn farmers and conducted in 1986, is the only one that we know of that has addressed the issue of actual farmer perfor