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Assessing the Challenges in Successful Implementation and Adoption of Crop Insurance in Thailand

Author

Listed:
  • Shweta Sinha

    (Asian Institute of Technology (AIT), Pathumthani 12120, Thailand)

  • Nitin K. Tripathi

    (Asian Institute of Technology (AIT), Pathumthani 12120, Thailand)

Abstract

The purpose of this paper is to assess the gaps in the adoption of crop insurance in Thailand and suggest possible solutions relating to policy support and framework, implementation mechanisms, technology adoption, and awareness amongst farmers. The methodology includes a literature review, interaction with officials, rice experts and insurance experts, and discussion with farmers. A study was undertaken at province level to assess the impact of using rainfall index as a threshold. Additionally, focused group discussions (FGD) were conducted with rice farmers at the village level. Key issues targeted in the FGD were to understand the behavior and practices during droughts, impact of drought on crop yield, methods already in use to reduce the impact, such as plantation of drought-resistant rice, and the adoption of crop insurance. Data availability is a challenge and has led to withdrawal of Weather Index Insurance (WII) in 2015. WII have threshold levels based on historical rainfall. Adoption of coping mechanisms, such as drought-resistant rice and irrigation increases the chances of adverse selection. In absence of ground based weather data, a combination of satellite agriculture drought information can be used to make crop insurance more attractive as it would help in reducing basis risk and improving insurers and farmers’ confidence in the product. Discussion with farmers, insurance companies, and the Bank of Agriculture and Agricultural Cooperatives (BAAC) in Thailand suggested low awareness among farmers about the potential benefits of weather index insurance products. Relatively low compensation is also an obstacle. Proper marketing and awareness raising campaigns should also accompany the introduction of index-based insurance products.

Suggested Citation

  • Shweta Sinha & Nitin K. Tripathi, 2016. "Assessing the Challenges in Successful Implementation and Adoption of Crop Insurance in Thailand," Sustainability, MDPI, vol. 8(12), pages 1-20, December.
    • Handle: RePEc:gam:jsusta:v:8:y:2016:i:12:p:1306-:d:85026
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    References listed on IDEAS

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    1. Olivier Mahul & Charles J. Stutley, 2010. "Government Support to Agricultural Insurance : Challenges and Options for Developing Countries," World Bank Publications - Books, The World Bank Group, number 2432, December.
    2. Shawn Cole & Xavier Giné & James Vickery, 2017. "How Does Risk Management Influence Production Decisions? Evidence from a Field Experiment," The Review of Financial Studies, Society for Financial Studies, vol. 30(6), pages 1935-1970.
    3. Jaroslav Mysiak & C. D. Pérez-Blanco, 2015. "Partnerships for Affordable and Equitable Disaster Insurance," Working Papers 2015.40, Fondazione Eni Enrico Mattei.
    4. Ward, Patrick S. & Spielman, David J. & Ortega, David L. & Kumar, Neha & Minocha, Sumedha, 2015. "Demand for Complementary Financial and Technological Tools for Managing Drought Risk: Evidence from Rice Farmers in Bangladesh," 2015 AAEA & WAEA Joint Annual Meeting, July 26-28, San Francisco, California 204882, Agricultural and Applied Economics Association.
    5. Michael T. Norton & Calum Turvey & Daniel Osgood, 2012. "Quantifying spatial basis risk for weather index insurance," Journal of Risk Finance, Emerald Group Publishing, vol. 14(1), pages 20-34, December.
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    Cited by:

    1. Md Monjurul Islam & Tofael Ahamed & Ryozo Noguchi, 2018. "Land Suitability and Insurance Premiums: A GIS-based Multicriteria Analysis Approach for Sustainable Rice Production," Sustainability, MDPI, vol. 10(6), pages 1-28, May.
    2. Mwaka Kayula & Collins Otieno Odoyo & Chanda Sichinsambwe, 2022. "Effects of Crop Insurance and Finance on Small-Scale Maize Productivity in Zambia," International Business Research, Canadian Center of Science and Education, vol. 15(10), pages 1-48, October.
    3. Weijia Wang & Wen Wang & Kun Wang & Yanyun Zhao & Ran Yu, 2023. "Remote Sensing Application in Pure Premium Rate-Making of Winter Wheat Crop Insurance," Sustainability, MDPI, vol. 15(9), pages 1-15, April.
    4. Saowanit Prabnakorn & Shreedhar Maskey & F. X. Suryadi & Charlotte Fraiture, 2019. "Assessment of drought hazard, exposure, vulnerability, and risk for rice cultivation in the Mun River Basin in Thailand," Natural Hazards: Journal of the International Society for the Prevention and Mitigation of Natural Hazards, Springer;International Society for the Prevention and Mitigation of Natural Hazards, vol. 97(2), pages 891-911, June.

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