KOUAME Euphrasie Ben Houassa

MINISTERE DE L'ENSEIGNEMENT SUPERIEUR ET DE LA RECHERCHE SCIENTIFIQUE UNIVERSITEFELIX HOUPHOUËT-BOIGNY COCODY-ABIDJAN UNITE DE FORMATION ET DE RECHERCHE DES SCIENCES ECONOMIQUES ET DE GESTION (UFR-SEG) Année académique 2013-2014 L- THESE PHD présentée par : KOUAME Euphrasie Ben Houassa Soutenue publiquement le 24 Janvier 2014 Pour obtenir Je grade de : DOCTEUR DES UNIVERSITES PUBLIQUES DE COTE D'IVOIRE ~!inetS. pjcialitl': Sciences Economiques/Economie du Développement THESE dirigée par : M. AKE N'GBO Gilbert Marie Professeur Titulaire, Université Félix Houphouët-Boigny, Côte d'Ivoire JURY: Président: M. DIA W Adama Professeur Titulaire, Université Louis Gaston Berger, Saint Louis, Sénégal Membres : M. AKE N'GBO Gilbert Marie Professeur Titulaire, Université Félix Houphouët-Boigny, Côte d'Ivoire M. KOUASSI Eugene Maître de Conférences, Université Félix Houphouët-Boigny, Côte d'Ivoire M. OUATTARA Wautabouna Maître de Conférences Agrégé, Université Félix Houphouët-Boigny, Côte d'Ivoire M. ADAIR Philippe Maître de Conférences Agrégé HDR, Université Paris Est Créteil, France M. ACCLASSATO Denis Maître de Conférences Agrégé, Université Abomcy-Calavi, Bénin M.BALLOZié Maître de Conférences Agrégé, Université Félix Houphouët-Boigny, Côte d'Ivoire RISK A VERSION AND AGRICULTURAL DECISION-MAKING UND ER UNCERTAINTY: EVIDENCE FROM COCOA FARMERS IN WESTERN CÔTE D'IVOIRE A Thesis presented to the Faculty of Economies and Management, Felix Houphouet-Boigny University ofCocody, Abidjan, Côte d'Ivoire In Partial Fulfilment of the Requiremcnts for the Degree of Doctor of Philosophy by Kouamé Euphrasie Ben-Houassa June,2013 DEDICATION To my Nissy and my late Father ii DISCLAIMER The Felix Houphouet Boigny University will not give any approbation to the opinions found in this dissertation. They have to be considered as persona[ to the author. iii ACKNOWLEDGEMENTS First I am very much grateful to the African Economie Research Consortium (AERC) for giving me the opportunity to pursue my studies under his Collaborative PhD Programme. I am highly indebted to my superviser, Professer N'Gbo Aké Gilbert Marie for bis guidance, support, and faith throughout the entire thesis process. Without him this thesis would not have developed the way it did. Neither words can fully articulate his role in the materialization of this effort. Sincere thanks are extended to my internai defense committee members, Professer Marna Ouattara, Professer Wautabouna Ouattara and Professer Zié Ballo for their constructive criticism and recommendations for this study. I would like to extend my appreciation to Dr Mahmud Y esuf and Dr Abbi Kedir for their expert advice and opinions. I am also thankful to Mr. Carlin Ama from the National Institute of Statistics (INS) who helped me in organizing the fieldwork. Without the kind cooperation of the respondents (farmers), this study wouldn't have been possible. In this regard, I would like to thank the farmers for their hospitality and willingness to take substantial time off work to take part of the experimental sessions and complete the survey questionnaire. I also thank the staff of the Agriculture and Rural Development Bureau (ANADER-Soubré) for their invaluable advice during the data collection period. I would like to thank my friends and colleagues, Dr Narcisse Komenan, Dr Marcellin Brou Bosson, Dr Obert Pimihdzai, Dr Alastaire Alinsato, Edith Togba, Dorothé Yong and Christian Kamala for their continuous support, encouragement, and enthusiasm throughout the completion ofthis dissertation. Finally, I am especially thankful to my family for their love and support. To my parents, for their prayers and encouraging words, which helped me to overcome many obstacles. In particular my best of gratitude goes to my mother for raising and taking care of my daughter Nissy. Thanks 'MAMA'. I am especially grateful to my lovely daughter Nissy. Nissy, you are truly the oxygen that sustains me. I wish also to express my special thanks to my sisters and brothers for the love and friendship that we have maintained through the years. Thank you ail for having been there for me. Last but not least I wish to express my special thanks to Michel Binaté for his continuous understanding, encouragement and faith in me. iv TABLE OF CONTENTS DEDICATION ii DISCLAIMER iii ACK.NOWLEDGEMENTS iv TABLE OF CONTENTS V LIST OF TABLES X LIST OF FIGURES xi ABSTRACT xii RESUME xiii LIST OF ACRONYMS AND ABBREVIAT I ONS xiv GENERAL INTRODUCTION 1 1. Background of the study 1 2. Problem statement 3 3. Objectives of the study 4 4. Significance of the study 5 5. Outline of the dissertation 6 CHAPTER ONE: RISK, RISK AVERSION AND RISK MANAGEMENT IN AGRICULTURE. 8 1.1. Introduction 8 1.2. Sorne basic concepts and definitions 9 1.2.1. Defining risk and uncertainty 9 1.2.2. Measuring risk 10 1.2.2. l. Risk as chance of a bad outcome 10 1.2.2.2. Risk as variability of the outcomes 11 1.2.2.3. Risk as uncertainty of the outcomes 11 1.2.2.4. Limitations of the risk measures 11 1.3. Theories of decision making under risk and uncertainty 12 1.3 .1. The expected utility theory 13 1.3.1.1. Axioms of the EU theory 14 1.3.1.2. Violation of the EU theory 16 1.3.2. The non-expected utility model: The Prospect Theory 21 1.3.3. Risk aversion and stochastic dominance 24 1.3 .3 .1. Risk aversion and concavity of the utility function 24 1.3.3.2. Certainty equivalent and risk premium 25 1.3.3.3. Measures ofrisk aversion 27 V 1.3.3.4. Stochastic dominance 29 1.4. Types of risk in agriculture 30 1.4.1. Sources of risk 30 1.4.2. Spread and magnitude of risk 32 1.4.3. Impact ofrisk in farming 32 1.5. Risk management strategies in farming 34 1.5.1. fa-ante strategies 35 1.5.2. Ex-post strategies 37 1.6. Conclusion 39 CHAPTER TWO: OVERVIEW OF THE COCOA SECTOR IN COTE D'IVOIRE 40 2.1. Introduction 40 2.2. Country overview and the study area 41 2.2.1. Geographical settings 41 2.2.2. Population-Poverty situation and profile 43 2.2.2.1. Demographic situation 43 2.2.2.2. Profile of poverty in Côte d'Ivoire 44 2.2.3. The study area: Biophysical environment 44 2.2.3.1. The study region 44 2.2.3.2. The department of study 45 2.2.4. Relevance of the department for the study 46 2.3. Agronomie and historical background ofcocoa production 47 2.3.1. Origin and technological features of the cocoa tree 47 2.3.2. Production pattern 48 2.3.3. Harvest and Marketing Period 50 2.3.3.1. Themaincrop 50 2.3.3.2. The mid-crop 51 2.3.4. Cocoa production zones in Côte d'Ivoire 51 2.4. Cocoa marketing system 52 2.4. l. Pre-liberalization marketing system 52 2.4.1.1. Role of the CAISTA B until the beginning of the 1990s 52 2.4.1.2. The reforms of the l 990s 53 2.4.2. Total liberalization of the cocoa sector 53 2.4.2.1. Contents of the liberalisation 54 2.4.2.2. Consequences of the liberalisation 54 2.4.3. New reforms in the cocoa sector 55 vi 2.4.3.1. The refonns of the 2000s 55 2.4.3.2. Restructuring of the sector 56 2.4.3.3. Recent developments 57 2.4.4. Cocoa market structure 58 2.4.4.1. Major actors in the cocoa marketing chain 58 2.4.4.2. Cocoa value chain 60 2.5. Constraints faced by farmers in Côte d'Ivoire cocoa sector. 60 2.5.1. Domestic constraints 61 2.5.1.1. Pest/diseases of the plants 61 2.5.1.2. Taxes in the cocoa sector 62 2.5.1.3. Other domestic constraints 64 2.5.2. Global constraints 64 2.5.2.1. Price volatility 64 2.5.2.1. Determinants of cocoa price volattility 67 2.6. Conclusion 69 CHAPTER THREE: MODELLING FARMERS' BEHA VIOURAL RESPONSES TO RISKS 70 3.1. Introduction 70 3.2. Sample design and survey questionnaire 70 3.2.1. Sampling procedure 70 3.2.1.1. Sampling plan 71 3.2.1.2. Sample size determination 71 3.2.1.3. Distribution of the sample 72 3.2.2. Research instrument 72 3.3. Data collection 73 3.3.1. Training of data collectors 73 3.3.2. Pre-testing 74 3.3.3. Household survey 74 3.4. Assessing farmers' risk aversion and its detcrminants: The empirical methodology 76 3.4.1. Eliciting farmers' risk behaviour 77 3.4.1.1. Design of the experiment.. 81 3.4.1.2. Deriving risk aversion coefficient 83 3.4.2. Modelling risk aversion with persona! characteristics: The Ordered Logit mode!... 85 3.4.2.1. Explanatory variables and expected sign 86 3.4.2.2. Endogeneity of"farm income" 90 3.5. Risk perceptions and econometric analysis offarmers' risk management decision-making 91 vii 3.5.1. Behavioural Mode! (Discrete choice models) 93 3.5.2. Modelling determinants offanners' risk management decisions: The Multivariate Probit mode) 99 3.5.3. Explanatory variables and expected sign 103 3.6. Conclusion 106 CHAPTER FOUR: DETERMINANTS OF FARMERS' RISK ATTITUDES AND RISK MANAGEMENT STRATEGIES 107 4.1. Introduction 107 4.2. Household socio-demographic and economic characteristics 107 4.2.1. Socio-demographic attributes 107 4.2.2. Wealth composition and distribution 109 4.3. Farmers' risk preferences 112 4.3.1. Distribution ofpreferences to risk over games 112 4.3.2. Homogeneity in risk distribution 115 4.3.3.

Load more