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

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.