Conference Agenda

Dissimilar to the increase in organic good consumption, the transition from conventional farming to organic was slowdown recently despite transparent benefits of organic farming to farmers. To solve this dilemma, understanding the roles of farmer individual preferences on their willingness to convert to organic farming is necessary. We conducted a lab-in-the-field experiment to elicit farmer's risk, ambiguity, time preferences along with a survey to obtain their social and other control factors and retrieved 611 completed respondents in Vietnam. We introduce a theoretical framework to propose two propositions on effects of risk and ambiguity attitudes on farmer's profit optimization. Our study employ an endogenous fractional model to reveal the impact farmer's risk and ambiguity preferences on their willingness to convert to organic farming. Specifically, the results indicate farmer's insurance and political affiliation good instruments to measure the endogenous effect of farmer's risk and ambiguity preference on their intended land conversion. Regarding control variables, farmers who are future bias and has low discount rate willing to adopt organic farming. Social trust and social norm stimulate the land conversion percentage of farmers to organic farming. To promote land conversion to organic farming, policymakers should design adjustable support schemes to decrease farmer's risk/ambiguity aversion such as Common Agricultural Policy (CAP) enacted in the EU. Timely support for early organic adopters is also substantial because organic farming is a long-term investment business.