Risk attitude effects on Global-GAP certification decisions by smallholder French bean farmers in Kenya

N. Kibet, G.A. Obare and J.k Lagat

Journal of Behavioral and Experimental Finance, 2018, vol. 18, issue C, 18-29

Abstract: Knowledge on the link between French beans farmers’ attitudes toward risks and Global-GAP compliance decisions is limited in Kenya. A social experiment (Lottery games involving real pay-offs) was implemented on 119 randomly selected farmers to solicit risk attitudes and Binary Logit Model to determine the effect of risk attitudes on compliance decisions. Majority of non-certified farmers (24 percent) were risk averse relative to certified farmers (4.3). Non-certified farmers were more averse towards losses (p=0.062|MD=0.50). Farmer’s probability weighting (p=0.046), aversion to loss (p=0.094), contract farming (p=0.000) and daily household expenditure per adult equivalent significantly and negatively affected compliance decisions while risk aversion (p=0.081), annual asset value (p=0.092) and acreage under French beans (p=0.033) significantly and positively affected compliance decisions. The results suggest that crop insurance and affordable credit is important in mitigation of potential production and marketing risks in French bean farming.

Keywords: Smallholder farmers; French beans; Risk attitudes; Global-GAP certification decisions (search for similar items in EconPapers)
Date: 2018
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Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:beexfi:v:18:y:2018:i:c:p:18-29

DOI: 10.1016/j.jbef.2018.01.003

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