Smallholder French Beans Farmers Global-Gap Standards Risk Attitudes, and their Effects on Welfare in Kirinyaga County, Kenya

Abstract

Despite the importance of Global-GAP standards in promoting production and marketing of quality French beans in Kenya, compliance is still low. Using data from randomly selected 492 French beans, farmers, the study sought to determine the link between risk preferences, Global-GAP certification, observed poverty, and vulnerability to future poverty. The study used social experiment and 5-point Likert scale to solicit risk attitudes parameters, binary Logit model to determine the effect of risk attitudes on Global-GAP certification decision and observed poverty status. Foster-Greer-Thorbecke class of poverty and Propensity Score Matching approaches were used to determine the impact of Global-GAP certification on observed poverty while Vulnerability as Expected Poverty approach was used to determine vulnerability to future poverty. SPSS and STATA were used in data analysis. The study found that French bean farmer who underweighted expected returns and overweighted production costs and losses (p = 0.046|β = -4.079), as well as those who were loss averse (p = 0.094|β = -0.192), were less likely to comply with Global-GAP standards. However, those who were risk averse (p = 0.081|β = 3.263) were more likely to comply with Global-GAP standards to avoid expected risks and losses. Global-GAP certification significantly and positively influenced French beans income per acre (p < 0.05|MD = KES -9,216.86) and household annual income (p < 0.05|MD = 370,352). Compliance with Global-GAP increased net annual French beans income per acre by at least KES 17,307.70 (t = 3.876), total annual household income per adult equivalent increased by at least KES 18,146.20 (t = 1.998) and annual expenditure per adult equivalent increased by 25.9 percent. Aversion to risks (p = 0.051|β = -2.802) increased household observed poverty. Mean vulnerability was 19.6 percent, which is below 50 percent threshold. Farmers who were expenditure poor (p < 0.05) and income poor (p < 0.05) were vulnerable to expected poverty. French beans farmers who like taking risks (p = 0.051|β = 0.8198) were more vulnerable to future poverty. The results suggest that French beans farmers should take more risks by expanding the acreage under Global-GAP certified French beans to increase their income and expenditure, thus reducing observed and expected poverty facing them. Since the production of Global-GAP certified French beans is a profitable venture, Government (both national and County Governments) in collaboration with financial institutions (insurance companies and banks) should develop insurance and credit products relevant to farmers producing vegetables for export. This will mitigate aversion to risks and lack of capital among vegetable farmers.