Via journal online., Agriculture is inherently a risky enterprise because of its dependence on rainfall. To mitigate
risks, farmers diversify crops and enterprises, maintain stabilization account or resort to the sale of assets. Crop insurance is a complementary institutional mechanism that aids farmers to cope with risks better.Considering the importance of crop insurance in risk mitigation, this paper using data from a large-scale farmers’ survey we identify the factors that influence farmers’ decision to buy crop insurance and subsequently assess its impact on farm income, production expenses and productive investments in agriculture. Farmers’ adoption of crop insurance is low— 4.80% kharif season and 3.17% in the rabi season mainly on account of lack of awareness about insurance products. Nevertheless, the probability of adoption of insurance is higher for those who experience higher crop loss and have some formal training in agriculture. The subsidy on premium also positively influences crop insurance uptake decisions. On the other hand, the factors like the lower social status, tenant farming and exposure to deficit-rainfall in the previous year are negatively associated with the decision to insure. The results on the impact of insurance are not conclusive to prove that insured farmer subsumes higher risks compared to the uninsured.
8 pages, A spatial analysis of variation in return on investment for crop insurance showed that West Coast wine grape growers are more inclined to use insurance to maximize short-term net returns than to protect against cash flow shortages. Growers would benefit from knowing that even if crop insurance does not maximize short-term net returns, it increases the revenue floor, thereby helping prevent cash flow shortages and vineyard failure. With crop insurance as the backbone of the U.S. agricultural safety net, an understanding of factors that drive variation in crop insurance participation can improve agricultural Extension agents' ability to offer programming on crop insurance issues. Additionally, agents can use publicly available data to replicate the analysis described in this article for other insured crops.
Agricultural Communications Documentation Center, Funk Library, University of Illinois Document Number: D08613
Notes:
Located in Review of Extension Studies, volumes for 1946-1956, U.S. Department of Agriculture, Washington, D.C., Summary of research report. New York Agricultural College, Cornell University, Ithaca. Extension Bulletin 864. 62 pages.
