Masters Theses

Date of Award

5-2014

Degree Type

Thesis

Degree Name

Master of Science

Major

Agricultural Economics

Major Professor

Margarita Velandia

Committee Members

Chris Clark, Kim Jensen, Dayton Lambert

Abstract

The product liability risk related to fruit and vegetable marketing is that of customer liability associated with injuries caused by harmful products such as contaminated fresh produce. An event associated with product liability risk may have a very low probability of occurrence but may result in a large economic loss. Producers may be unaware of the product liability risk they face, the potential cost of this risk and, therefore their need to adopt measures against this risk. The purpose of this thesis is to examine perceptions of Tennessee fruit and vegetable producers about product liability risk when selling fruits and vegetables, and measures they take to protect themselves against this risk. The data for this thesis was gathered from a survey of Tennessee fruit and vegetable producers.

This study examines both fruit and vegetable producer perceptions of product liability risk as a risk face when selling fruits and vegetables and producer adoption of insurance providing product liability coverage. The first essay of the thesis focuses on the evaluation of factors associated with fruit and vegetable producer perceptions of product liability risk. The second essay of this thesis evaluates the factors influencing producer adoption of insurance providing product liability coverage.

Factors influencing fruit and vegetable producer perceptions of product liability risk are evaluated using a probit regression. Results suggest that perceptions of product liability risk are associated with producer primary occupation, total household income, whether a farmer produces lettuce or cantaloupes for sale, percentage of farm’s gross annual sales from fresh fruits and vegetables, and the number of farms harvesting vegetables for fresh market in the county where the farming operation is located.

Using a probit regression with instrumental variables this study also assesses the factors influencing Tennessee fruit and vegetable producer decision to adopt insurance providing product liability coverage. Results suggest that farmer decision to purchase product liability insurance is associated with the percentage of sales made through retail outlets (e.g., institution, grocery and restaurant).

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