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Article
Publication date: 22 November 2011

Milton Boyd, Jeffrey Pai, Qiao Zhang, H. Holly Wang and Ke Wang

The purpose of this paper is to explain the factors affecting crop insurance purchases by farmers in Inner Mongolia, China.

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Abstract

Purpose

The purpose of this paper is to explain the factors affecting crop insurance purchases by farmers in Inner Mongolia, China.

Design/methodology/approach

A survey of farmers in Inner Mongolia, China, is undertaken. Selected variables are used to explain crop insurance purchases, and a probit regression model is used for the analysis.

Findings

Results show that a number of variables explain crop insurance purchases by farmers in Inner Mongolia. Of the eight variables in the model, seven are statistically significant. The eight variables used to explain crop insurance purchases are: knowledge of crop insurance, previous purchases of crop insurance, trust of the crop insurance company, amount of risk taken on by the farmer, importance of low crop insurance premium, government as the main information source for crop insurance, role of head of village, and number of family members working in the city.

Research limitations/implications

A possible limitation of the study is that data includes only one geographic area, Inner Mongolia, China, and so results may not always fully generalize to all regions of China, for all situations.

Practical implications

Crop insurance has been recently expanded in China, and the information from this study should be useful for insurance companies and government policy makers that are attempting to increase the adoption rate of crop insurance in China.

Social implications

Crop insurance may be a useful approach for stabilizing the agricultural sector, and for increasing agricultural production and food security in China.

Originality/value

This is the first study to quantitatively model the factors affecting crop insurance purchases by farmers in Inner Mongolia, China.

Details

China Agricultural Economic Review, vol. 3 no. 4
Type: Research Article
ISSN: 1756-137X

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Article
Publication date: 6 May 2021

Becca B.R. Jablonski, Joleen Hadrich and Allie Bauman

The Agriculture Improvement Act of 2018 directed the United States Department of Agriculture (USDA) Risk Management Association to investigate a policy targeted to farms…

Abstract

Purpose

The Agriculture Improvement Act of 2018 directed the United States Department of Agriculture (USDA) Risk Management Association to investigate a policy targeted to farms and ranches that sell through local food markets. However, there is no available research that quantitatively documents the extent to which local food producers utilize Federal crop insurance.

Design/methodology/approach

The authors utilize 2013–2016 USDA Agricultural Resource Management Survey data to compare farms and ranches with sales through local food markets to those with and without Federal crop insurance expenditure, as well as the distribution of Federal crop expenditure, across market channels and scales.

Findings

There is a little variation in Federal crop insurance expenditure across market channels, defined as direct-to-consumer only sales, intermediated sales, and a combination of direct-to-consumer and intermediated sales. Rather, the results show that scale is the primary predictor of Federal crop insurance expenditure; larger operations are more likely to have nonzero Federal crop insurance expenses.

Originality/value

This article provides the first national research to document descriptive statistics of the utilization of Federal crop insurance by US farms and ranches that utilize local food market channels.

Details

Agricultural Finance Review, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 0002-1466

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Article
Publication date: 10 August 2020

A.G. Adeeth Cariappa, Darshnaben P. Mahida, Priyanka Lal and B.S. Chandel

The purpose of this paper is to identify the correlates of crop insurance adoption and estimate the impact on debt and farm income.

Abstract

Purpose

The purpose of this paper is to identify the correlates of crop insurance adoption and estimate the impact on debt and farm income.

Design/methodology/approach

The authors used nationally representative data from National Sample Survey Office (NSSO), which consisted of 35,200 farming households. Logit and propensity score matching (PSM) (nearest neighbor, caliper and kernel matching) techniques were used.

Findings

With only around 5% of households insuring their crops and 87% of them not receiving claims, crop insurance in India has failed. Logit model estimates of correlates of adoption indicated that households with larger family size, lower social group, less education, lower standard of living and poor were more likely to be left out of the ambit of crop insurance. Further, propensity score estimates suggested that households with access to crop insurance had significantly lesser outstanding debt with positive effect on input costs and crop income. The authors’ results were in contrast to the risk balancing theory.

Practical implications

Results of our work encourage us to rethink and restructure the crop insurance policy design in India. With credit and insurance markets interlinked by design and as the risk balancing in the farm business found absent, policies to strengthen both the markets are the need of the hour. To encourage more farmers to take up crop insurance, revenue-based indemnity calculation could be tried in India.

Originality/value

Impact estimates from three different algorithms of matching were compared and tested for robustness. Consistent average treatment effect on treated (ATT) was considered for interpretation and policy implications. Since the data are from a nationally representative survey, results are believed to be of extreme value to policy makers and insurance providers as it can be generalized.

Details

Agricultural Finance Review, vol. 81 no. 2
Type: Research Article
ISSN: 0002-1466

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Article
Publication date: 26 August 2014

Harun Bulut and Keith J. Collins

The purpose of this paper is to use simulation analysis to assess farmer choice between crop insurance and supplemental revenue options as proposed during development of…

Abstract

Purpose

The purpose of this paper is to use simulation analysis to assess farmer choice between crop insurance and supplemental revenue options as proposed during development of the Agricultural Act of 2014.

Design/methodology/approach

The certainty equivalent of wealth is used to rank farm choices and assess the effects of supplemental revenue options on the crop insurance plan and coverage level chosen by the producer under a range of farm attributes. The risk-reducing effectiveness of the select programs is also examined through their impact on the farm revenue distribution. The dependence structure of yield and prices is modeled by applying copula techniques on historical data.

Findings

Farm program supplemental revenue programs generally have no effect on crop insurance choices. Crop insurance supplemental revenue programs typically reduce crop insurance coverage at high coverage levels. An individual plan of crop insurance combined with a supplemental revenue insurance plan may substitute for incumbent area crop insurance plans.

Originality/value

The analysis provides insights into farmers’ possible choices by focussing on alternative crops and farm attributes and extensive scenarios, using current data, crop insurance plans and programs contained in the 2014 Farm Bill and related bills. The results should be of value to policy officials and producers in regards to the design and use of risk management tools.

Details

Agricultural Finance Review, vol. 74 no. 3
Type: Research Article
ISSN: 0002-1466

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Article
Publication date: 1 November 2003

Teresa Serra, Barry K. Goodwin and Allen M. Featherstone

The crop insurance purchase decision for a group of Kansas farmers is analyzed using farm‐level data from the 1990s, a period that experienced many changes in the federal…

Abstract

The crop insurance purchase decision for a group of Kansas farmers is analyzed using farm‐level data from the 1990s, a period that experienced many changes in the federal crop insurance program. Results indicate a reduction in the elasticity of the demand for crop insurance with respect to premium rates by the end of the decade. The reduction in demand elasticity corresponded with a considerable increase in government subsidies by the end of the 1990s. This result may also reflect the attractiveness of new revenue insurance products which may have made producers less sensitive to premium changes.

Details

Agricultural Finance Review, vol. 63 no. 2
Type: Research Article
ISSN: 0002-1466

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Article
Publication date: 1 November 2004

Dmitry V. Vedenov, Mario J. Miranda, Robert Dismukes and Joseph W. Glauber

An economic analysis is presented of the Standard Reinsurance Agreement (SRA), the contract governing the relationship between the Federal Crop Insurance Corporation and…

Abstract

An economic analysis is presented of the Standard Reinsurance Agreement (SRA), the contract governing the relationship between the Federal Crop Insurance Corporation and the private insurance companies that deliver crop insurance products to farmers. The paper outlines provisions of the SRA and describes the modeling methodology behind the SRA simulator, a computer program developed to assist crop insurers and policy makers in assessing the economic impact of the Agreement. The simulator is then used to analyze how the SRA affects returns from underwriting crop insurance. The results are presented in aggregate and also at the regional and individual company levels.

Details

Agricultural Finance Review, vol. 64 no. 2
Type: Research Article
ISSN: 0002-1466

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Article
Publication date: 3 May 2016

Marie-Christine Bélanger

This paper is based on a crop insurance implementation currently undergoing in Haiti. The purpose of this paper is to present the development of a program tailored to rice…

Abstract

Purpose

This paper is based on a crop insurance implementation currently undergoing in Haiti. The purpose of this paper is to present the development of a program tailored to rice production in the Artibonite Valley, the challenges and opportunities that are arising from the exercise as well as pitfalls and ways to avoid them.

Design/methodology/approach

The Système de Financement et d’Assurances Agricoles en Haïti’s approach for the development of crop insurance is in accordance with 13 concepts considered essential in the implementation of agricultural insurance programs. The case study is presented through each of these 13 fundamental concepts.

Findings

The paper provides an insight on challenges any organization will face when implementing crop insurance for smallholder farmers. It points out notably that close collaboration of executing agencies with local partners is essential from data collection through insurance development and delivery and that all participants should receive a specific training tailored to their level of education and understanding.

Social implications

Haiti is one of the poorest countries on the planet. Smallholder farmers could benefit a lot from crop insurance. It could help them stabilize their income when facing crop losses due to natural hazards or uncontrollable natural events.

Originality/value

This paper fulfills an identified need to share real case studies exposing challenges faced when implementing crop insurance for smallholder farmers.

Details

Agricultural Finance Review, vol. 76 no. 1
Type: Research Article
ISSN: 0002-1466

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Article
Publication date: 1 November 2003

Ashok K. Mishra and Barry K. Goodwin

This research examines factors influencing the adoption of crop and revenue insurance. This is accomplished by estimating a multinomial logit model of insurance choices…

Abstract

This research examines factors influencing the adoption of crop and revenue insurance. This is accomplished by estimating a multinomial logit model of insurance choices facing U.S. farmers. Results indicate significant differences in the probabilities of adoption of each insurance plan. The levels of selected explanatory variables, such as operator’s education level, debt‐to‐asset ratio, off‐farm income, soil productivity, participation in production and marketing contracts, and type of farm ownership, appear to be the determinants of the probability of having adopted each insurance plan.

Details

Agricultural Finance Review, vol. 63 no. 2
Type: Research Article
ISSN: 0002-1466

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Article
Publication date: 13 July 2021

Victor Owusu, Awudu Abdulai and Williams Ali

This article analyzes farmers' preferences for different nonindexed crop insurance alternatives, using discrete choice experiment data on cocoa farmers from southern…

Abstract

Purpose

This article analyzes farmers' preferences for different nonindexed crop insurance alternatives, using discrete choice experiment data on cocoa farmers from southern Ghana. We examine farmers' attendance to attributes by comparing self-reported attribute nonattendance (ANA) to the behavior inferred from the choices.

Design/methodology/approach

We utilize the latent class endogenous attribute attendance (EAA) model to address potential endogeneity by jointly modelling farmers' attribute processing strategies with their choice of attributes of the insurance products.

Findings

The results show that premium levels, mode and length of indemnity payouts tend to influence farmers' preferences for crop insurance products. The findings also reveal that credit-constrained farmers attend more to premium and payment mode attributes of the crop insurance products and that credit-constrained farmers tend to exhibit lower willingness-to-pay estimates for the crop insurance attributes.

Research limitations/implications

The findings from the study suggest that credit constraints do not only limit input use, but also tend to have statistically significant impact on farmers' cocoa insurance participation decisions.

Originality/value

The study examines the impact of credit constraints on farmers' crop insurance preferences while accounting for ANA.

Details

Journal of Agribusiness in Developing and Emerging Economies, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 2044-0839

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Article
Publication date: 23 June 2021

Bhishma R. Dahal, Sudip Adhikari and Aditya R. Khanal

In Nepal, crop insurance is at initial phase. However, since its implementation seven years ago, the adoption rate has been fairly low even with the government's lucrative…

Abstract

Purpose

In Nepal, crop insurance is at initial phase. However, since its implementation seven years ago, the adoption rate has been fairly low even with the government's lucrative subsidy on premium. There have been very limited studies on specifics of insurance for different crops, and farmer's acceptability on insurance. This study examines WTP for tree-based insurance, a potential insurance scheme on fruit crops in hilly areas of Nepal.

Design/methodology/approach

The authors used a contingent valuation method to estimate farmer's willingness to pay (WTP) premium for insurance. They used a double-bounded dichotomous choice (DBDC) framework to elicit WTP and an interval regression method to estimate the WTP model.

Findings

The authors found that the farmers revealed WTP for tree-based insurance is three times higher than the premium they would pay under government's current subsidy plans of insurance. The authors’ result from interval regression also suggests that the factors such as farm size, farmer's adverse experience about invasive pest and weather, awareness of crop insurance, farming experience, and family involvement in agriculture significantly influence farmers' WTP.

Research limitations/implications

A distinct modality of insurance, like tree-based insurance for fruit crops in mid and high hill areas, may enhance the adoption rate rather than a broad area-based plan generalized for all crops.

Originality/value

Only a few studies have examined specifics of insurance in fruit crop insurance in developing countries. The authors’ estimated WTP factors influencing WTP on citrus fruit-crop insurance in Nepal indicates that there is a scope for extending this insurance program. However, the authors also found that there is a gap in understanding of crop insurance and have limited awareness on the government's subsidy programs among farmers.

Details

Journal of Agribusiness in Developing and Emerging Economies, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 2044-0839

Keywords

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