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

Author

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  • Kibet, N.
  • Obare, G.A.
  • Lagat, J.K

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.

Suggested Citation

  • Kibet, N. & Obare, G.A. & Lagat, J.K, 2018. "Risk attitude effects on Global-GAP certification decisions by smallholder French bean farmers in Kenya," Journal of Behavioral and Experimental Finance, Elsevier, vol. 18(C), pages 18-29.
    • Handle: RePEc:eee:beexfi:v:18:y:2018:i:c:p:18-29
    DOI: 10.1016/j.jbef.2018.01.003
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