Farmer preference for swine price index insurance: Evidence from Jiangsu and Henan provinces of China

Abstract

Purpose

The purpose of this paper is to examine farmer preference for swine price index insurance in China focusing on whether Chinese farmers are willing to consider purchasing swine price index insurance, the premium they would like to pay, as well as the extend of heterogeneity in their preferences.

Design/methodology/approach

A sample of 443 swine farmers in Jiangsu and Henan provinces is collected and analyzed. An Ordered Probit model is used to analyze farmers’ willingness to buy swine price index insurance and a Tobit model is used to analyze farmers’ willingness to pay (WTP) for insurance premium.

Findings

Results show that some farmers are not willing to purchase swine price index insurance. However, WTP of majority of farmers is higher than what is prescribed in the current insurance policy. Factors affecting farmers’ willingness to buy varied between two provinces. Experience in purchasing traditional swine insurance and risk perception affect farmers’ willingness to buy in Jiangsu province, while joining agricultural cooperatives, experience in purchasing traditional swine insurance and understanding of swine price index insurance affect farmers’ willingness to buy in Henan province. Farmers with non-agricultural income, longer years of swine breeding, higher degree of specialization, experience in purchasing traditional insurance, higher understanding of swine price index insurance and trust in local governments, stronger risk perception and risk preference, and not being a member of agricultural cooperatives have higher WTP.

Originality/value

Few studies have been conducted on swine price index insurance in China. Even less information, to the authors’ knowledge, is available on farmer preferences. The research provides a timely contribution to understand the Chinese swine price index insurance market from the perspectives of farmers.

Citation

Zhang, Y., Hu, W., Zhan, J. and Chen, C. (2020), "Farmer preference for swine price index insurance: Evidence from Jiangsu and Henan provinces of China", China Agricultural Economic Review, Vol. 12 No. 1, pp. 122-139. https://doi.org/10.1108/CAER-01-2019-0011