- Title
- Risk preferences and consumption decisions in organic production: the case of Kwazulu-Natal and Eastern Cape provinces of South Africa
- Creator
- Kisaka-Lwayo, Maggie
- Subject
- Food security -- South Africa
- Subject
- Sustainable development -- South Africa
- Subject
- Organic farming -- South Africa
- Subject
- Natural foods industry -- South Africa
- Subject
- Risk management -- South Africa
- Subject
- Consumers -- South Africa
- Date
- 2012
- Type
- Thesis
- Type
- Doctoral
- Type
- PhD (Agricultural Economics)
- Identifier
- vital:11188
- Identifier
- http://hdl.handle.net/10353/492
- Identifier
- Food security -- South Africa
- Identifier
- Sustainable development -- South Africa
- Identifier
- Organic farming -- South Africa
- Identifier
- Natural foods industry -- South Africa
- Identifier
- Risk management -- South Africa
- Identifier
- Consumers -- South Africa
- Description
- Despite phenomenal success of the commercial agricultural sector in South Africa and significant progress in integrating smallholders since democratic reforms, food security concerns remain. Recent global increases in food prices have further exacerbated vulnerabilities and made it imperative to examine alternative food production questions in the country. Organic agriculture is identified as one of the sustainable approaches to farming and offers insights towards a paradigm shift in food and nutritional security. Notwithstanding, consumer awareness, knowledge and consumption of organic foods are significantly lower in developing than developed countries. Risks associated with adoption of organic practices need to be explored to address the supply and demand constraints. Similarly, while consumer awareness of organic foods is the first step in developing demand for organic products, it does not necessarily translate to consumption. Therefore it is important to investigate these issues. The objectives of this study were to: (i) describe the demographic and socio-economic characteristics of organic farmers and consumers; (ii) establish the determinants of farmers‘ decision to participate in organic farming distinguishing between the fully-certified organic, partially-certified organic and non-organic farmers; (iii) elicit farmers risk preferences and empirically analyse farmers sources of risk and risk management strategies; (iv) explore consumer awareness, perceptions and attitudes regarding organic products; and (v) identify the factors that influence consumer‘s preference and consumption of organic products. A total of 400 respondents were surveyed, consisting of 200 smallholder farmers in KwaZulu-Natal and 200 consumers in the Eastern Cape. The KwaZulu-Natal study was conducted earlier and identified the following as major sources of risk, lack of consumer awareness of organic products and lack of information among producers about consumer preferences for organic products. This informed the need to undertake a consumer awareness and preference study, in order to inform producers. The Eastern Cape is a bordering province to KwaZulu-Natal with similar socio economic conditions and a major consumer of produce from KwaZulu-Natal. It was also expected that in the intervening period there could have been awareness about the product. An vii indication of its appeal would not be in the consumption of the product by the people who grow it, but by consumers who reside in bordering regions. Producer and household questionnaires were used to record household activities, socio-economic and institutional data as well as household demographics through personal interviews. The Arrow Pratt Absolute Risk Aversion (APARA) coefficient was used to measure the farmer‘s degree of risk aversion and the experimental gambling approach to establish the risk classification. Consumers were also asked about their awareness and knowledge about organics, attitudes and perceptions towards organics, preference and consumption patterns. The ordered probit results indicate that older farmers, who are less risk averse and reside in the sub-ward Ogagwini, Ezigani, and Hwayi were more likely to be certified organic farmers. Similarly, the propensity to adopt organic farming is positively correlated to household size, livestock ownership, asset base and tenure security. The risk analysis indicates that at higher pay-offs most farmers are intermediate to moderately risk-averse, with little variation according to personal characteristics, and that non-organic farmers tend to be more risk averse than fully-certified and partially-certified farmers. In general, price, production and financial risks were perceived as the most important sources of risk. Using Principal Component Analysis (PCA), seven principal components (PCs) explaining 66.13% of the variation were extracted. Socio economic factors having a significant effect on the various sources of risk are age, gender, education, location, information access and risk taking ability. The most important traditional risk management strategies used by the surveyed farmers are crop diversification, precautionary savings and participating in social networks. There was general awareness of what constituted organic foods with many consumers associating organic foods with health and nutrition, chemical free and produced using indigenous methods of production. However, there was low awareness of organic products among consumers with little or no knowledge of organic certification and standards. According to the logit model the major factors influencing consumer awareness of organic products are: gender, education, employment status, and location of the respondents, person/household member responsible for shopping and the price perception of the decision maker. The discriminant analysis showed that the consumption of organic products is significantly affected by age of the consumer, viii location, person/household member responsible for shopping, consumer awareness of organics, price perception and label trust. The findings from this study provides useful practical insights for policy makers, farm advisers and researchers in the design of effective and efficient policies, programmes and projects which can affect the adoption of organic practices, increase smallholder farmers capacity to manage risk and drive growth in the organic food market.
- Format
- xxii, 407 leaves
- Format
- Publisher
- University of Fort Hare
- Publisher
- Faculty of Science & Agriculture
- Language
- English
- Rights
- University of Fort Hare
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