COTTON FARMERS' PERCEIVED RISK AND INCOME VARIABILITY AFFECTED BY COMMODITY DERIVATIVE MARKETS: A CASE STUDY ON ODISHA (INDIA)

Agricultural production, particularly cotton farming, is highly vulnerable to fluctuating commodity prices and unpredictable weather, making risk mitigation crucial for sustainability and profitability. Cotton growers face market volatility and climate challenges that impact yields and income. Previous studies, such as Sharma & Bhushan (2019), highlighted the correlation between market instability and income fluctuation for smallholder cotton farmers, emphasizing improved risk management strategies. The quantitative study used data from 1000 cotton farmers from Odisha (India), selected via stratified random sampling to capture demographic diversity. A structured questionnaire was employed to gather information on key variables, with electronic distribution increasing accessibility. While the research provides. valuable insights, its cross-sectional design limits causal conclusions, and reliance on self-reported information may introduce bias and utilize SPSS to perform structural equation modeling (SEM) to understand the relationships between farmers' perceived risk, income variability, and the use of commodity derivatives. The result shows the negligible effect of commodity derivatives on the revenue stability of cotton growers, except for input costs. The varied risk assessments of farmers indicate that essential financial aspects are overlooked.