Factors differentiating the level of crop insurance at Polish farms

Adam Wąs (Faculty of Economic Sciences, Warsaw University of Life Sciences, Warsaw, Poland)
Pawel Kobus (Faculty of Economic Sciences, Warsaw University of Life Sciences, Warsaw, Poland)

Agricultural Finance Review

ISSN: 0002-1466

Publication date: 3 April 2018

Abstract

Purpose

The purpose of this paper is to identify the factors that determine demand for crop insurance in Poland.

Design/methodology/approach

To examine the determinants of decisions regarding crop insurance, the authors used logistic regression. The base source of data for the analysis was the 2013 FADN sample. The scale of yield losses, the indemnities received and the Arrow-Pratt risk aversion coefficient were examined in a representative sample of farms in consecutive years in the period 2004-2013.

Findings

Losses are the major determinants of crop insurance uptake. Additionally, it was observed that the economic determinants are in line with the expected utility theory, while contrary to expectations, farmer’s characteristics such as education level, age or even risk aversion did not prove to have any influence on crop insurance uptake.

Research limitations/implications

The FADN sample is representative as regards the type of farming, economic size of farm and location of the farm. Every farm in the sample represents a specific number of similar farms in the population. However, it must be emphasised that the representativeness of the sample with respect to other determinants, e.g., yield losses in previous years, using crop insurance or the farmers’ age and education has not been verified due to lack of data characterizing the general population with regard to these factors.

Practical implications

It could be argued that the system of crop insurance subsidies should be targeted to encourage the farmers who previously had not used insurance to join the system.

Originality/value

The paper presents the analysis of crop insurance uptake in a country with a strongly polarised agriculture. The Polish farm sector consists of 1.4 million farms with sizes ranging from 1 ha to over a few thousands hectares. The research is based on a data set of 5,202 farms which contains data from ten years (2004-2013). The novelty of the methodological approach is that it includes information on the number of farms represented by every farm in the FADN sample in the Horvitz-Thompson estimator in order to achieve results which are valid for the general population of Polish farms.

Keywords

Citation

Wąs, A. and Kobus, P. (2018), "Factors differentiating the level of crop insurance at Polish farms", Agricultural Finance Review, Vol. 78 No. 2, pp. 209-222. https://doi.org/10.1108/AFR-06-2017-0054

Download as .RIS

Publisher

:

Emerald Publishing Limited

Copyright © 2018, Emerald Publishing Limited

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

You may be able to access this content by logging in via Shibboleth, Open Athens or with your Emerald account.
To rent this content from Deepdyve, please click the button.
If you think you should have access to this content, click the button to contact our support team.