The framework for analyzing the participation decision in BVIS follows a random utility
framework developed by McFadden (1974). In this framework, a farmer is assumed to face a twostage
decision process. Firstly, a farmer voluntarily decides whether to participate or not depending
on his/her individual assessment of the perceived benefits. Once the decision is made, a farmer then
decides on the combination of crops to be grown. Under the scheme, a farmer had a choice to grow
rice only or a combination of rice with other crops such as maize, soy bean, or cowpea depending on
the ability of the farmer to manage the crops. A farmer is assumed to choose whether or not to participate
in the BVIS by choosing an option that provides the highest utility defined in terms of net
agricultural income. The decision to participate in the scheme and crop combination can be modeled
as a bivariate outcome which is assumed to be mutually exclusive. For each farmer, i, i = 1,…. , N , let
Uijd be the utility associated with each decision j and d are indicator variables for participation and
crop choice decisions, respectively. The general utility function can be expressed as: