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Prospects of Crop Insurance as a Risk Management Tool among Arable Crop Farmers in Ghana

Author

Listed:
  • Robert Aidoo
  • James Osei Mensah
  • Prosper Wie
  • Dadson Awunyo-Vitor

Abstract

The aim of this study was to assess the willingness of farmers to adopt crop insurance and the critical factors that influence the premium they are willing to contribute towards such a scheme. Two out of the eleven (11) agricultural operational areas in the Sunyani Municipality were selected purposively due to their dominance in maize and cassava production. Four (4) communities were randomly selected from each operational area through balloting and fifteen farmers were then selected from each community through the use of random numbers. A total of 120 farmers were selected from the Municipality for personal interviews to elicit primary information with the help of a structured questionnaire. A binary logistic regression model was used to identify the factors that influence farmers’ willingness to adopt crop insurance as a risk mitigation strategy. A double logarithmic multiple regression model was employed to determine the factors that influence the premium farmers were willing to pay towards a crop insurance scheme. Evidence from the study indicates that majority (76%) of farmers were willing to adopt crop insurance; age of farmer, land tenure system practiced and educational level were found to be the key drivers of crop insurance uptake, ex ante. The study revealed that government subsidy would be required for such an insurance scheme since the premium farmers pledged to pay was quite low and likely to be uneconomical from the perspective of private insurers. It was revealed that on-farm income, farm size, land tenure, educational level and amount of savings by farmers significantly influenced the premium farmers pledged to pay towards a crop insurance scheme. The study recommended periodic training and education of farmers to improve their knowledge on crop insurance as a risk management tool and the need for farmers to save in order to enhance the uptake of crop insurance when it is introduced in the study area.

Suggested Citation

  • Robert Aidoo & James Osei Mensah & Prosper Wie & Dadson Awunyo-Vitor, 2014. "Prospects of Crop Insurance as a Risk Management Tool among Arable Crop Farmers in Ghana," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 4(3), pages 341-354.
    • Handle: RePEc:asi:aeafrj:v:4:y:2014:i:3:p:341-354:id:1162
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    Citations

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    Cited by:

    1. Md. Monirul Islam & Shusuke Matsushita & Ryozo Noguchi & Tofael Ahamed, 2022. "A damage-based crop insurance system for flash flooding: a satellite remote sensing and econometric approach," Asia-Pacific Journal of Regional Science, Springer, vol. 6(1), pages 47-89, February.
    2. Dlamini, Lucinda Nosizo, 2019. "Determinants of commercial orientation and the level of market participation by women maize farmers in Eswatini," Research Theses 334763, Collaborative Masters Program in Agricultural and Applied Economics.
    3. Njue, E. & Kirimi, L. & Mathenge, M., 2018. "Uptake of Crop Insurance among Smallholder Farmers: Insights from Maize Producers in Kenya," 2018 Conference, July 28-August 2, 2018, Vancouver, British Columbia 277023, International Association of Agricultural Economists.
    4. Yeboah, Augustine Kwadwo & Obeng, Camara Kwasi, 2016. "Effect of financial literacy on willingness to pay for micro-insurance by commercial market business operators in Ghana," MPRA Paper 70135, University Library of Munich, Germany.
    5. Opeyemi Obafemi Adelesi & Yean-Uk Kim & Heidi Webber & Peter Zander & Johannes Schuler & Seyed-Ali Hosseini-Yekani & Dilys Sefakor MacCarthy & Alhassan Lansah Abdulai & Karin van der Wiel & Pierre C. , 2023. "Accounting for Weather Variability in Farm Management Resource Allocation in Northern Ghana: An Integrated Modeling Approach," Sustainability, MDPI, vol. 15(9), pages 1-21, April.
    6. Ellis, Emmanuella, 2017. "Factors Affecting Risk Management Strategies To Climate Change Effects In Ghana," International Journal of Food and Agricultural Economics (IJFAEC), Alanya Alaaddin Keykubat University, Department of Economics and Finance, vol. 5(1), January.
    7. Mbonane, Nobuhle Duduzile, 2018. "An analysis of farmers’ preferences for crop insurance: a case of maize farmers in Swaziland," Research Theses 334771, Collaborative Masters Program in Agricultural and Applied Economics.
    8. Rajeev, Meenakshi & Nagendran, Pranav, 2023. "Protecting land and livelihood under climate risks: What hinders crop insurance adoption?," Land Use Policy, Elsevier, vol. 131(C).
    9. Wonder Agbenyo & Yuansheng Jiang & Xinxin Jia & Jingyi Wang & Gideon Ntim-Amo & Rahman Dunya & Anthony Siaw & Isaac Asare & Martinson Ankrah Twumasi, 2022. "Does the Adoption of Climate-Smart Agricultural Practices Impact Farmers’ Income? Evidence from Ghana," IJERPH, MDPI, vol. 19(7), pages 1-25, March.

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