Risk Management and Perception of Coffee Growers

Abstract

The current research studied the relationship between risk management by the institutions underlying the Colombian coffee sector and risk perceptions held by Colombian coffee growers from a neo-institutional approach, in order to explain the risk perceptions and individual behaviors of coffee growers and establishing the effect of institutions on risk perception and management of Colombian coffee growers. The research was performed through an explanatory study with a sequential mixed approach, formed by two phases: (a) a qualitative phase characterized by elaboration of taxonomies on the risks Colombian coffee growers are vulnerable to, and on risk management instruments offered by institutions, creating a coffee grower’s profile, sociodemographic features and exploitation scale; and (b) a quantitative stage that developed a Structural Equation Model (SEM), through which the existing relationship between risk management offered by Colombian coffee sector institutions and risk perceptions of Colombian coffee growers was empirically evaluated, by studying risk perceptions from past experiences and the way coffee growers deal with the risk associated to situations they must face, risk attitudes and management strategies. The study concluded that the set of risk management instruments offered by the institutions underlying the coffee sector lower risk exposure of Colombian coffee growers, and also determine their risk management strategies. In addition, the current study showed that adjusting the extended model proposed by Sitkin and Pablo (1992) showed its capacity to capture the relationships observed in the context of the Colombian coffee grower. Finally, the institutions underlying the coffee sectors affect risk perceptions of opportunity or threat situations faced by coffee growers; it is also validated through the existing relationship between the constructs.