To read the full version of this content please select one of the options below:

Determinants of insurance adoption among Bulgarian farmers

Marianne Lefebvre (European Commission, Joint Research Centre, IPTS, Seville, Spain)
Dimitre Nikolov (Institute of Agricultural Economics, Sofia, Bulgaria)
Sergio Gomez-y-Paloma (European Commission, Joint Research Centre, IPTS, Seville, Spain)
Minka Chopeva (Institute of Agricultural Economics, Sofia, Bulgaria)

Agricultural Finance Review

ISSN: 0002-1466

Article publication date: 26 August 2014

Abstract

Purpose

The purpose of this paper is to analyze the determinants of agricultural insurance adoption in Bulgaria, using a purpose-built survey of 224 farmers interviewed in 2011. The insurance decision is analyzed conjointly with other risk management decisions on the farm such as having contracts with retailers or processors, diversifying farm activities and using irrigation.

Design/methodology/approach

The agricultural insurance sector in Bulgaria is presented in the broader context of the transition to a market-oriented economy and integration of Bulgarian agriculture into the EU Common Agricultural Policy. The recent developments on the determinants of farm insurance adoption in the agricultural economics and finance literature are discussed. A multivariate probit model is used in order to determine the factors explaining the adoption or non-adoption of various risk management tools by the surveyed farmers, including farm insurance.

Findings

The authors find that farmers with diversified activities, using irrigation or having contracts with retailers or processors, are more likely to adopt insurance, after controlling for farms and farmers’ structural characteristics. Additionally, the authors find that the main characteristics distinguishing farmers who purchase agricultural insurance from non-users are farm size and farm location. The existence of strong regional effect suggests the importance of adapting the insurance products to the different regional contexts in Bulgaria.

Originality/value

This paper contributes to the (limited) literature on agricultural insurance adoption in transition countries, currently shifting from a system where compensation against natural hazards tended to come from a State damage mitigation fund, inherited from the centrally planned governments to private and voluntary agricultural insurance. This research provides a unique data source on the Bulgarian case study.

Keywords

Acknowledgements

JEL Classification — Q14

The collection of data was funded by the project “Risk Management in Agriculture” (2011-2012), financed by the Bulgarian Agriculture Academy and the Ministry of Agriculture and Food. The authors would like to thank Anna Atkinson for careful proofreading and Salvador Barrios for helpful comments. The views expressed are purely those of the authors and may not in any circumstances be regarded as stating an official position of the European Commission.

Citation

Lefebvre, M., Nikolov, D., Gomez-y-Paloma, S. and Chopeva, M. (2014), "Determinants of insurance adoption among Bulgarian farmers", Agricultural Finance Review, Vol. 74 No. 3, pp. 326-347. https://doi.org/10.1108/AFR-05-2013-0022

Publisher

:

Emerald Group Publishing Limited

Copyright © 2014, Emerald Group Publishing Limited