Abstract
The purpose of the present study was to analyze the effect of multiple variables on the decision to invest in high versus regular-quality coffee production inputs. Thereby, a laboratory experiment was conducted with one hundred twenty-three undergraduate students, and posterior logistic regressions with random intercept were executed to analyze the collected data. The results showed that when there is a difference in the investment cost between a coffee of higher quality and a coffee of lower quality (regular), there is a slight increase in the odds ratio of investment in quality coffee, when going from an uncertainty condition of income to one with certainty in income of a higher quality coffee. On the other hand, when the cost is equal for both types of coffee, there is a strong increase in the odds ratio when going from an uncertainty condition to one with certainty. In addition, it was found that both the possibility of loss if there is an investment in a higher quality coffee and the ambiguity in the probability of facing a favorable business climate, reduce the odds ratio of investing in higher-quality coffee.
Highlights
The maximization of agricultural production efficiencies has long been studied from different approaches, including the management of nutrients, diseases or soil (Huettel, Narayana, & Odening, 2011; Mulebeke, Kironchi, & Tenywa, 2015)
In Costa Rica, coffee has been an integral part of its culture, politics, and economics for more than two centuries, and thereby it functions as a structural backbone to its rural economy (Díaz, 2015)
In order to identify key elements that influence the decision to invest more money in the production of higher-quality coffee versus regular-quality coffee, the present study analyzed the effect of the following variables in the decision-making process: a) income ambiguity associated to producing higherquality coffee; b) equalization of the production costs between higher-quality coffee and regular-quality coffee; c) money loss probability due to investing in higher-quality coffee; and d) favorable versus unfavorable business climate ambiguity
Summary
The maximization of agricultural production efficiencies has long been studied from different approaches, including the management of nutrients, diseases or soil (Huettel, Narayana, & Odening, 2011; Mulebeke, Kironchi, & Tenywa, 2015). The former has been a particular concern for economies that reply to their welfare and global transactions on agricultural activities (Welbaum, Sturz, Dong, & Nowak, 2004). Costa Rica's coffee production predominantly operates through small and medium-sized farms, with intensive practices concerning fertilizers, pesticides, higher-yield varieties and high-density planting (Courville, 2003). According to Díaz (2015) most small and medium-sized farms tend to focus on the production of regularquality coffee instead of high-quality coffee, since the majority of Costa Rica’s production comes from organizations that blend and sell different coffee quality varieties at a single price, usually based on the international stock market
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