The Impact of Traditional Culture on Farmers’ Moral Hazard Behavior in Crop Production: Evidence from China

Liguo Zhang,Xuerong Li

doi:10.3390/su8070643

Abstract

To obtain higher yields, farmers may excessively use pesticides when they grow crops (like rice, vegetables, or fruit), causing moral hazard behavior. This paper examines how Chinese farmers’ moral hazard behavior in crop production is influenced by their traditional culture. A semi-parametric logistic model is used to investigate the impact of Chinese traditional culture on farmers’ moral hazard behavior. The results reveal that Chinese traditional culture has a positive effect on ameliorating the farmers’ excessive use of pesticides in crop production, which leads to a moral hazard in agro-product safety. Specifically, when we control for extraneous variables, the probability of moral hazard decreases by 15% if farmers consider their traditional culture in their production decisions. Moreover, the probability of moral hazard decreases by 17% if farmers consider the traditional culture as a powerful restraint regarding the use of pesticides. Our analysis provides some supportive evidence on the effect of Chinese traditional culture on mitigating farmers’ excessive use of pesticides.

Highlights

As important input chemicals in agricultural production, pesticides play an irreplaceable role in promoting agricultural development, increasing production, and farmers’ incomes [1,2]
This implies that when we control for extraneous variables, the probability of moral hazard decreases by 15% if farmers consider the traditional culture when they are making crop production decisions
It may be that farmers who are concerned about environmental pollution in rural areas know the harm of excessive use of pesticides on the rural ecological environment, so those farmers will regulate the use of pesticides

Summary

Introduction

As important input chemicals in agricultural production, pesticides play an irreplaceable role in promoting agricultural development, increasing production, and farmers’ incomes [1,2]. As in the agro-products market, there is a principal-agent relationship between buyers and farmers, the buyers (such as agricultural enterprises, wholesalers, supermarkets, and the final consumers) are the principal, while the farmers are the agent. They sign a production contract (sometimes farmers may use certificates instead of contracts, like organic certificates), the buyers commission the farmers to produce agro-products with safe quality, and there are strict regulations on the application of pesticides, including variety, time, and dose. Given the quality information asymmetry in the agro-products market, farmers may excessively use pesticides in the pursuit of higher profits

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