Why Have Some Farmers Opposed Futures Markets?

A self-interest explanation is presented for opposition by some farm groups to futures markets. During the twenties and thirties, political oppositi on to futures markets was greater in the grain-producing states. The line elevator companies were prominent in these states and not others , and used futures prices to facilitate a buying cartel. Futures pric es were used to derive a suggested buying price for elevator purchase s in each local market. The political opposition to futures by farmer s was designed to raise the cost of operating local cartels. Politic al opposition was greater, and gross profit margins of elevators were higher in state with line elevators. Copyright 1988 by University of Chicago Press.