Hedging behavior of agribusiness cooperatives and investor-owned firms in Germany

While agriculture is unique with respect to the prevalence of producer owned cooperatives (coops) operating alongside and investor owned firms (IOFs), little is known about their relative reliance on futures markets to hedge commodity price risk. This study investigates factors influencing the hedging behavior of both business forms and finds that each are significantly impacted by the perspective of key influencers of their decision making units (e.g., employees, members, shareholders, board of directors, advisors, consultants, bankers). Notably, coops are found to be more likely to hedge using futures but do so more sparingly (i.e., lower hedging ratios), which may reflect an ability to conduct natural hedges internally and/or less speculative positions taken in futures markets. [Econ Lit classification: Q130]. •Cooperatives are hypothetically more likely to hedge in futures markets but also to do so more sparingly than other firms.•Empirical evidence on this relationship is sparse.•Probit and truncated regression models investigate agribusiness’s use and intensity of use of futures markets.•Results confirm that cooperatives are more likely to hedge in futures but do so more sparingly than other firms in Germany.