IDEAS home Printed from https://ideas.repec.org/a/gam/jijerp/v17y2020i8p2733-d345981.html
   My bibliography  Save this article

Risk Attitude, Contract Arrangements and Enforcement in Food Safety Governance: A China’s Agri-Food Supply Chain Scenario

Author

Listed:
  • Jing Hou

    (Business School, Jiangsu Normal University, Xuzhou 221116, China)

  • Linhai Wu

    (Food Safety Research Base of Jiangsu Province, School of Business, Jiangnan University, Wuxi 214122, China)

  • Bo Hou

    (School of Philosophy and Public Administration, Jiangsu Normal University, Xuzhou 221116, China)

Abstract

Frequent food safety problems in recent years have seriously affected China’s public health. The complexity, diversity, and technicality of food safety problems are intertwined, which constantly promotes the Chinese government and the food industry to explore effective food safety governance mechanisms. As the dominant form of vertical coordination in agri-food supply chain, contract farming is conducive to promoting farmers’ safe production behavior, improving food quality and safety, and ensuring public health. However, the low contract performance rate seriously restricts the effect of contract farming on reducing the risk of food safety in China. This paper empirically investigates the role of farmers’ risk attitude and contract arrangements in their enforcement. The data is derived from a household survey and economic field experiment of fruit farmers participating in contract farming in Anhui and Jiangsu provinces of China. We measure farmers’ risk attitude by using an economic field experiment, and examine how risk attitude and contract arrangements affect contract enforcement with a probit model. The results show that contract enforcement is significantly (1% level) influenced by farmers’ risk attitude. Farmers with greater risk aversion and loss aversion and farmers who are more accurate in evaluating probability information are more likely to fulfill the contract. Additionally, most contract arrangements have a significant effect on contract enforcement at the 5% level. Contract arrangements with floor pricing, bonus, and long duration are related to a higher rate of farmers’ contract performance. Furthermore, the factors influencing contract enforcement differ based on the levels of farmer’ risk attitude. The findings of the study may be conducive to formulating relevant agricultural policy to influence farmers’ decision-making and thus improving food safety and ensuring public health.

Suggested Citation

  • Jing Hou & Linhai Wu & Bo Hou, 2020. "Risk Attitude, Contract Arrangements and Enforcement in Food Safety Governance: A China’s Agri-Food Supply Chain Scenario," IJERPH, MDPI, vol. 17(8), pages 1-16, April.
    • Handle: RePEc:gam:jijerp:v:17:y:2020:i:8:p:2733-:d:345981
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/1660-4601/17/8/2733/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/1660-4601/17/8/2733/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Andreas C. Drichoutis & Rodolfo M. Nayga, 2015. "Do risk and time preferences have biological roots?," Southern Economic Journal, John Wiley & Sons, vol. 82(1), pages 235-256, July.
    2. Nguyen Hung Anh & Wolfgang Bokelmann & Ngo Thi Thuan & Do Thi Nga & Nguyen Van Minh, 2019. "Smallholders’ Preferences for Different Contract Farming Models: Empirical Evidence from Sustainable Certified Coffee Production in Vietnam," Sustainability, MDPI, vol. 11(14), pages 1-26, July.
    3. Brick, Kerri & Visser, Martine, 2015. "Risk preferences, technology adoption and insurance uptake: A framed experiment," Journal of Economic Behavior & Organization, Elsevier, vol. 118(C), pages 383-396.
    4. Jema Haji, 2010. "The Enforcement of Traditional Vegetable Marketing Contracts in the Eastern and Central Parts of Ethiopia," Journal of African Economies, Centre for the Study of African Economies, vol. 19(5), pages 768-792, November.
    5. Tversky, Amos & Kahneman, Daniel, 1992. "Advances in Prospect Theory: Cumulative Representation of Uncertainty," Journal of Risk and Uncertainty, Springer, vol. 5(4), pages 297-323, October.
    6. Jianhua Wang & Hanyu Diao & Lulu Tou, 2019. "Research on the Influence Mechanism of Rational Consumers’ Food Safety Supervision Satisfaction," IJERPH, MDPI, vol. 16(5), pages 1-16, March.
    7. Jianjun Jin & Rui He & Haozhou Gong & Xia Xu & Chunyang He, 2017. "Farmers’ Risk Preferences in Rural China: Measurements and Determinants," IJERPH, MDPI, vol. 14(7), pages 1-11, June.
    8. Quang Nguyen, 2011. "Does nurture matter: Theory and experimental investigation on the effect of working environment on risk and time preferences," Journal of Risk and Uncertainty, Springer, vol. 43(3), pages 245-270, December.
    9. Petrolia, Daniel R., 2016. "Risk preferences, risk perceptions, and risky food," Food Policy, Elsevier, vol. 64(C), pages 37-48.
    10. Ji, Chen & Jin, Songqing & Wang, Haitao & Ye, Chunhui, 2019. "Estimating effects of cooperative membership on farmers’ safe production behaviors: Evidence from pig sector in China," Food Policy, Elsevier, vol. 83(C), pages 231-245.
    11. Elaine M. Liu, 2013. "Time to Change What to Sow: Risk Preferences and Technology Adoption Decisions of Cotton Farmers in China," The Review of Economics and Statistics, MIT Press, vol. 95(4), pages 1386-1403, October.
    12. Sahar Daghagh Yazd & Sarah Ann Wheeler & Alec Zuo, 2019. "Key Risk Factors Affecting Farmers’ Mental Health: A Systematic Review," IJERPH, MDPI, vol. 16(23), pages 1-23, December.
    13. Steffen Andersen & Glenn Harrison & Morten Lau & E. Rutström, 2009. "Elicitation using multiple price list formats," Experimental Economics, Springer;Economic Science Association, vol. 12(3), pages 365-366, September.
    14. Tomomi Tanaka & Colin F. Camerer & Quang Nguyen, 2010. "Risk and Time Preferences: Linking Experimental and Household Survey Data from Vietnam," American Economic Review, American Economic Association, vol. 100(1), pages 557-571, March.
    15. Jing Hou & Bo Hou, 2019. "Farmers’ Adoption of Low-Carbon Agriculture in China: An Extended Theory of the Planned Behavior Model," Sustainability, MDPI, vol. 11(5), pages 1-20, March.
    16. Kreps, David M. & Wilson, Robert, 1982. "Reputation and imperfect information," Journal of Economic Theory, Elsevier, vol. 27(2), pages 253-279, August.
    17. Quang Nguyen & Colin Camerer & Tomomi Tanaka, 2010. "Risk and Time Preferences Linking Experimental and Household Data from Vietnam," Post-Print halshs-00547090, HAL.
    18. Drazen Prelec, 1998. "The Probability Weighting Function," Econometrica, Econometric Society, vol. 66(3), pages 497-528, May.
    19. Gow, Hamish R. & Streeter, Deborah H. & Swinnen, Johan F. M., 2000. "How private contract enforcement mechanisms can succeed where public institutions fail: the case of Juhocukor a.s," Agricultural Economics, Blackwell, vol. 23(3), pages 253-265, September.
    20. Tomislav Vukina & Porametr Leegomonchai, 2006. "Oligopsony Power, Asset Specificity, and Hold-Up: Evidence from the Broiler Industry," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 88(3), pages 589-605.
    21. Guo, Hongdong & Jolly, Robert W., 2008. "Contractual arrangements and enforcement in transition agriculture: Theory and evidence from China," Food Policy, Elsevier, vol. 33(6), pages 570-575, December.
    22. Hongdong Guo & Robert W Jolly & Jianhua Zhu, 2007. "Contract Farming in China: Perspectives of Farm Households and Agribusiness Firms," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 49(2), pages 285-312, June.
    23. Joost M.E. Pennings & Raymond M. Leuthold, 2000. "The Role of Farmers' Behavioral Attitudes and Heterogeneity in Futures Contracts Usage," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 82(4), pages 908-919.
    24. Kong, Dongmin & Shi, Lu & Yang, Zhiqing, 2019. "Product recalls, corporate social responsibility, and firm value: Evidence from the Chinese food industry," Food Policy, Elsevier, vol. 83(C), pages 60-69.
    25. H. Holly Wang & Yanbing Wang & Michael S. Delgado, 2014. "The Transition to Modern Agriculture: Contract Farming in Developing Economies," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 96(5), pages 1257-1271.
    26. Kumar, Shiv & Chandra, Subhash & Singh, D.R. & Chaudhary, Khyali R., 2013. "Contractual Arrangements and Enforcement in India: The Case of Organic Basmati Paddy Farming," Indian Journal of Agricultural Economics, Indian Society of Agricultural Economics, vol. 68(3), pages 1-8.
    27. Liu, Elaine M. & Huang, JiKun, 2013. "Risk preferences and pesticide use by cotton farmers in China," Journal of Development Economics, Elsevier, vol. 103(C), pages 202-215.
    28. Bin Cui & Feifei Wang & Linda Dong-Ling Wang & Chengyun Pan & Jun Ke & Yi Tian, 2019. "A Comparative Analysis of Risk Perception and Coping Behaviors among Chinese Poultry Farmers Regarding Human and Poultry Infection with Avian Influenza," IJERPH, MDPI, vol. 16(20), pages 1-13, October.
    29. Britwum, Kofi & Yiannaka, Amalia, 2019. "Consumer willingness to pay for food safety interventions: The role of message framing and issue involvement," Food Policy, Elsevier, vol. 86(C), pages 1-1.
    30. Sabine Liebenehm & Hermann Waibel, 2014. "Simultaneous Estimation of Risk and Time Preferences among Small-scale Cattle Farmers in West Africa," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 96(5), pages 1420-1438.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Hou, Jing & Chen, Feiyu, 2020. "Private Enforcement Mechanisms and Contract Stability in Agri-food Supply Chain: An Empirical Evidence from China," 2020 Annual Meeting, July 26-28, Kansas City, Missouri 304586, Agricultural and Applied Economics Association.
    2. Julia Ihli, Hanna & Chiputwa, Brian & Winter, Etti & Gassner, Anja, 2022. "Risk and time preferences for participating in forest landscape restoration: The case of coffee farmers in Uganda," World Development, Elsevier, vol. 150(C).
    3. Golo-Friedrich Bauermeister & Daniel Hermann & Oliver Musshoff, 2018. "Consistency of determined risk attitudes and probability weightings across different elicitation methods," Theory and Decision, Springer, vol. 84(4), pages 627-644, June.
    4. Freudenreich, Hanna & Musshoff, Oliver, 2022. "Experience of losses and aversion to uncertainty - experimental evidence from farmers in Mexico," Ecological Economics, Elsevier, vol. 195(C).
    5. Mao, Hui & Zhou, Li & Ifft, Jennifer & Ying, RuiYao, 2019. "Risk preferences, production contracts and technology adoption by broiler farmers in China," China Economic Review, Elsevier, vol. 54(C), pages 147-159.
    6. Mao, Hui & Zhou, Li & Ifft, Jennifer, 2017. "Risk Preferences, Contracts and Technology Adoption by Broiler Farmers in China," 2017 Annual Meeting, July 30-August 1, Chicago, Illinois 257248, Agricultural and Applied Economics Association.
    7. Liebenehm, S. & Waibel, H., 2014. "Risk and Time Preferences of West African Cattle Farmers," Proceedings “Schriften der Gesellschaft für Wirtschafts- und Sozialwissenschaften des Landbaues e.V.”, German Association of Agricultural Economists (GEWISOLA), vol. 49, March.
    8. Liebenehm, S. & Waibel, H., 2018. "Really too risk averse and too impatient to escape poverty? Insights from a field experiment in West Africa," 2018 Conference, July 28-August 2, 2018, Vancouver, British Columbia 277480, International Association of Agricultural Economists.
    9. Lily, Miriam Al & Liebenehm, Sabine & Waibel, Hermann, 2021. "Risk and Time Preferences of Poor Urban Households in Saudi Arabia," 2021 Conference, August 17-31, 2021, Virtual 315152, International Association of Agricultural Economists.
    10. Bontemps, Christophe & Bougherara, Douadia & Nauges, Céline, 2020. "Do Risk Preferences Really Matter? The Case of Pesticide Use in Agriculture," TSE Working Papers 20-1095, Toulouse School of Economics (TSE).
    11. Liebenehm, Sabine & Waibel, Hermann, 2013. "Risk and Time Preferences of West African Cattle Farmers," 53rd Annual Conference, Berlin, Germany, September 25-27, 2013 156110, German Association of Agricultural Economists (GEWISOLA).
    12. Mao, Hui & Zhou, Li & Ying, RuiYao & Pan, Dan, 2021. "Time Preferences and green agricultural technology adoption: Field evidence from rice farmers in China," Land Use Policy, Elsevier, vol. 109(C).
    13. Geraldine Bocquého & Marc Deschamps & Jenny Helstroffer & Julien Jacob & Majlinda Joxhe, 2018. "Risk and Refugee Migration," Working Papers of BETA 2018-16, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
    14. Visser, Martine & Jumare, Hafsah & Brick, Kerri, 2020. "Risk preferences and poverty traps in the uptake of credit and insurance amongst small-scale farmers in South Africa," Journal of Economic Behavior & Organization, Elsevier, vol. 180(C), pages 826-836.
    15. Wu, Haixia & Ge, Yan & Li, Jianping, 2023. "Uncertainty, time preference and households’ adoption of rooftop photovoltaic technology," Energy, Elsevier, vol. 276(C).
    16. Petraud, Jean & Boucher, Stephen & Carter, Michael, 2015. "Competing theories of risk preferences and the demand for crop insurance: Experimental evidence from Peru," 2015 Conference, August 9-14, 2015, Milan, Italy 211383, International Association of Agricultural Economists.
    17. Alexis H. Villacis & Jeffrey R. Alwang & Victor Barrera, 2021. "Linking risk preferences and risk perceptions of climate change: A prospect theory approach," Agricultural Economics, International Association of Agricultural Economists, vol. 52(5), pages 863-877, September.
    18. Immanuel Lampe & Daniel Würtenberger, 2019. "Loss Aversion And The Demand For Index Insurance," Working Papers on Finance 1907, University of St. Gallen, School of Finance.
    19. Géraldine Bocquého & Julien Jacob & Marielle Brunette, 2023. "Prospect theory in multiple price list experiments: further insights on behaviour in the loss domain," Theory and Decision, Springer, vol. 94(4), pages 593-636, May.
    20. Ferdinand M. Vieider & Peter Martinsson & Pham Khanh Nam & Nghi Truong, 2019. "Risk preferences and development revisited," Theory and Decision, Springer, vol. 86(1), pages 1-21, February.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jijerp:v:17:y:2020:i:8:p:2733-:d:345981. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.