Farmers preferred end-values related to their use of forward contract
a means-end chain analysis
Today?s farmers are constantly affected by the fluctuating world market prices on grain and thereby the price risk that comes with the price fluctuations. The volatile prices of grain increase the price risk within the business, which in turn affects the profitability of the business. The fluctuating prices together with the increased price risk within the farm business have opened up the market for hedging instruments.
In this master thesis project, the aim is to identify the underlying end-values of 30 Swedish farmers? related to their choice of using hedging and the product; forward contract. The study is based on the means-end chain (MEC) approach together with the laddering interview technique. This approach has been used in order to analyze 30 Swedish farmers cognitive structure in their choice of using the hedging product. Hence, the intention with the approach was to identify attributes, consequences and values related to the farmers? choice of using hedging as a strategy to mitigate the price risk. To accomplish a more extensive analysis of the farmers underlying end-values, the personal value theory was used as a complement to the MEC approach. The findings from this study can thus provide an understanding for the farmers? motives of using hedging.
After identifying the underlying end-values, they were categorized into various value groups related to the personal value theory and the ten universal value groups. Six underlying end-values was identified during the interviews with the farmers, Feel good, Feel calm, Operate a viable and competitive business, Continue business, Control over business and Security. By analyzing these values, the author could recognize five of them as strongly related to the personal value theory and the universal values groups. The end-values Feel good and Feel calm were both related to the personal value Hedonism, further were the end-value Feel good also related to the personal value Self-direction. The end-value Control over business was related to the personal value Power. The end-value Continue business was related to the personal values, Security, Benevolence and Achievement depending on the situation the farmers referred to in the interview. The fifth value that was strongly associated with the personal value theory was Security which was related to the personal value Security. The end-value, Operate a viable and competitive business, was first recognized as the value group Achievement, which is explained as the farmers? willingness to reach personal success. The value could be seen as a value in itself, or a value related to the business rather than the farmers? personal welfare. Therefore, the value has been argued to appear as a business value instead of a personal value for the farmers.
The findings of this study could help companies that are offering hedging instruments to create new instruments that are conducted in order to satisfy the farmers? needs. The obtained knowledge of the studied problem can also contribute as guidance for companies when thinking of advertising, starting new campaigns or implement new hedging tools. Further, the study could inspire or influence other farmers that are thinking of using forward contract as a strategy to mitigate the price risk.