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How well does the crop insurance market function in Russia?

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  • Bobojonov, Ihtiyor
  • Goetz, Linde
  • Glauben, Thomas

Abstract

In this paper we aim to investigate the demand for crop insurance in Russia, identifying primary influencing factors. We use a cross sectional yearly data set on participation in crop insurance and agricultural production for about 60 regions (oblasts) of Russia for the years 2008-2011. We follow Goodwin’s (1993) approach to estimate the crop insurance demand model with the proportion of planted acres insured as the dependent variables. Our results suggest that the previous subsidy policy to reimburse 50 percent of the insurance premiums has reduced the demand for crop insurance. This may be explained by the negative price elasticity of insurance demand as well as with the cumbersome reimbursement mechanism. Furthermore, operation costs of insurance companies lie above international averages and absorb nearly all governmental subsidies without transferring it to the producers. Therefore, the insurance program in Russia does not function as a subsidy transfer mechanism for farmers. The improvement of the efficiency of the insurance industry in Russia is required in order to increase the attractiveness of the program.

Suggested Citation

  • Bobojonov, Ihtiyor & Goetz, Linde & Glauben, Thomas, 2014. "How well does the crop insurance market function in Russia?," 2014 International Congress, August 26-29, 2014, Ljubljana, Slovenia 182856, European Association of Agricultural Economists.
    • Handle: RePEc:ags:eaae14:182856
    DOI: 10.22004/ag.econ.182856
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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. Raushan Bokusheva & Heinrich Hockmann, 2006. "Production risk and technical inefficiency in Russian agriculture," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 33(1), pages 93-118, March.
    3. Götz, L. & Djuric, I. & Glauben, T., 2015. "Price Damping and Price Insulating Effects of Wheat Export Restrictions in Kazakhstan, Russia and Ukraine," Proceedings “Schriften der Gesellschaft für Wirtschafts- und Sozialwissenschaften des Landbaues e.V.”, German Association of Agricultural Economists (GEWISOLA), vol. 50, March.
    4. Barry K. Goodwin, 1993. "An Empirical Analysis of the Demand for Multiple Peril Crop Insurance," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 75(2), pages 425-434.
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    Cited by:

    1. Glauber, Joseph W., 2015. "Agricultural insurance and the World Trade Organization:," IFPRI discussion papers 1473, International Food Policy Research Institute (IFPRI).
    2. Glauber, Joseph W., 2017. "Agricultural insurance and the WTO:," IFPRI book chapters, in: Bouët, Antoine & Laborde Debucquet, David (ed.), Agriculture, development, and the global trading system: 2000– 2015, chapter 10, International Food Policy Research Institute (IFPRI).
    3. Schierhorn, Florian & Müller, Daniel & Prishchepov, Alexander V. & Faramarzi, Monireh & Balmann, Alfons, 2014. "The potential of Russia to increase its wheat production through cropland expansion and intensification," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 3(3-4), pages 133-141.
    4. Andrei Kirilenko & Nikolai Dronin, 2022. "Recent grain production boom in Russia in historical context," Climatic Change, Springer, vol. 171(3), pages 1-19, April.
    5. Tleubayev, Alisher & Bobojonov, Ihtiyor & Götz, Linde, 2022. "Agricultural policies and technical efficiency of wheat production in Kazakhstan and Russia: Evidence from a stochastic frontier approach," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 54(3), pages 407-421.

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