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Abstract

Australian wool producers have been slow to adopt price risk management strategies to stabilise the income from their wool sales. The highly volatile auction system accounts for 85% of raw wool sales while the remainder is sold by forward contract, futures and other hedging methods. Qualitative analysis was used to find behavioural factors associated with the adoption of price risk management strategies (specifically futures and forward contracts) for selling raw wool. Consideration was given to Diffusion of Innovations and the Theory of Planned Behaviour as theoretical frameworks in order to answer the research question: Are there any non-traditional behavioural factors that need to be incorporated into existing frameworks to determine adoption of price risk management strategies for selling raw wool? In contrast to these prominent theories, data from four focus groups conducted with wool producers in regional Western Australia showed that trust, habit and social cohesion were the major behavioural determinants that governed the adoption of price risk management strategies. The significance of this paper lies in its multi-disciplinary approach to understanding the dimensions of farm-level decision making.

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