The effect of quality signaling on willingness to pay for potato planting material : a research study in Kenya

Kenyan farmers can potentially access potato seeds from three distinct seed systems that provide different levels of quality assurance-the formal system (i.e., certified seed), the semi-formal system (i.e., clean seed) and the informal system (i.e., ware potato, own or neighbor's saved seed). However, similar to other vegetatively propagated crops, adoption of quality seeds (i.e., certified or clean seed) is strikingly low in the Kenyan potato sector. This inhibits the development of a robust and commercially viable potato sector and severely limits Kenya's potential to increase potato production while combating the spread of pathogens. This study uses auction experiments to measure farmers' willingness to pay for seed products representing the three seed systems and evaluates the effectiveness of each seed system in communicating the assurance of quality and the effect of trust of the seed source on farmer's valuation of seed products. The study contributes to the literature by exploring the role of information, branding, and reputation as quality signals to curtail the effects of information asymmetry in credence and experience attributes of quality seed. Results show that potato farmers in Kenya value the formal seed system the highest, followed by the semiformal and the informal systems. However, the formal seed system has not been effective in signaling quality through certification. In terms of the branding and reputation effect, the parastatal ADC Molo and some clean seed producers in selected counties showed strong signs of quality signaling through branding. What this means for the potato seed system in Kenya and beyond is that farmers do trust institutions (i.e., KEPHIS certification) as well as branding and reputation, but still remain hesitant to engage in the formal and semiformal seed systems due to other exogenous and endogenous factors.