A test on adverse selection of farmers in crop insurance: Results from Inner Mongolia, China

Zhao, Yuan feng; Chai, Zhi hui; Delgado, Michael S.; Preckel, Paul V.

doi:10.1016/s2095-3119(16)61440-5

Cited by 12 publications

(7 citation statements)

References 13 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…Research of Zhao et al (2017) on subsidised farmers in China confirms that farmers who choose to participate in insurance programs generally have a riskaverse attitude or a certain Risk Aversion Level (RAL). Farmers with a high perception of risk generally take part in an insurance program.…”

mentioning

confidence: 99%

Risk aversion level influence on farmer's decision to participate in crop insurance: A review

Yanuarti¹,

Aji²,

Rondhi³

2019

Agric. Econ. - Czech

View full text Add to dashboard Cite

Agricultural insurance in Indonesia is focused specifically on rice farming and is locally known as Asuransi Usahatani Padi (AUTP). To encourage farmer participation, the government subsidises farmers’ cost of insurance (premium) by 80%. Despite high subsidy, AUTP is still unable to reach the coverage target. The objectives of this study are to investigate farmers’ Risk Aversion Level (RAL), its influence on farmers’ decision to participate in AUTP, and the effect of farmers’ participation in AUTP on their income. The result of this study can contribute to enriching agriculture insurance literature from the point of view of developing countries and catalyse other studies on this matter especially in Indonesia. The analysis methods used in this study were multiple pricelist designs and propensity score matching with a logistic regression model. 130 farmers were interviewed. The results showed that farmers tend to have a high level of risk aversion (82.3% of farmers insure almost all of their land). RAL has a significant effect on farmers’ decision to purchase AUTP (< 0.01). A positive value of Average Treatment on the Treated (ATT) indicated that participation in AUTP has a positive impact on farmers’ income. AUTP is able to absorb production risks and encourage use of high input in farming.

show abstract

mentioning

confidence: 99%

Risk aversion level influence on farmer's decision to participate in crop insurance: A review

Yanuarti¹,

Aji²,

Rondhi³

2019

Agric. Econ. - Czech

View full text Add to dashboard Cite

show abstract

“…This behavior of farmers is called adverse selection. Adverse selection is a condition when a farmer who does not qualified for participating in CF takes particular actions to make him/herself eligible for the contract (Zhao et al, 2017b). The primary motive of the farmer's adverse selection behavior is to receive the economic incentive of CF.…”

Section: The Globalization Of Tobacco Value Chainmentioning

confidence: 99%

“…The reason farmers choose not to participate in CF has been attributed to the high priority farmers put on independency in managing their farm (Key, 2005). On the other hand, from the company perspective, the main problem arising from CF is the asymetric information problems in the form of moral hazard (non-compliance behaviour of farmer) and adverse selection (farmer choose to participate in CF because of their inherent risk characteristics) 2 (Roberts, O'Donoghue & Key, 2014;Zhao et al, 2017a). Both of these problems increase the transaction of cost of CF.…”

Section: Introductionmentioning

confidence: 99%

Asymmetric Information And Farmer’s Participation In Tobacco Contract Farming

Rondhi

Imelda

Setyawan

et al. 2020

jejak

View full text Add to dashboard Cite

Contract farming (CF) is an important tool to initiate structural transformation of agricultural sector in developing countries. However, one of pertinent problems in its establishment is asymmetric information. This problem creates a condition of mutual distrust between the contracting parties and decreases farmer’s participation in it. Thus, this study aimed to explain the asymmetric information problem in CF and find the correlates of farmer’s participation in it. As one of important industrial crops, this study focused on tobacco CF. This study was conducted at two villages (Antirogo and Nogosari) on two different sub-district (Sumbersari and Rambipuji) in Jember. A sample of 113 farmers were interviewed to collect the data. A descriptive analysis was used to explain the contract arrangement and asymmetric information in tobacco CF. A probit estimation was used to identify the coorelates of farmer’s participation in tobacco CF. The results showed that asymetric information does exists in tobacco CF and can be minimized through intense monitoring and increased transparancy. Both of these are possible when the company contracting directly with farmers. Meanwhile, younger farmer and those with more land are more likely to participate in CF. Furthermore, participation in CF is highly correlated with the increases in farm income. Finally, policy aimed to fostering CF should focused more on regulation that minimize the transaction cost of CF. In addition, in the long term, the policy should focused on incentivize young farmers and encouraging youth to enter agriculture.

show abstract

“…They include loopholes in the design of the program that are exploited by the insurance companies, the agriculture department officials, and sometimes the farmers themselves. Research on crop insurance programs in developing countries identifies adverse selection and moral hazard (Gulati, Terway, and Hussain 2018;Reyes et al 2017;Zhao 2017) as challenges (due to difficulty in measuring risks and monitoring farmer behavior), in addition to lack of efficiency in claims handling (Roberts 2005), lack of financial and human resources for crop yield surveys, and the absence of legal and regulatory frameworks to protect farmers against potential insurer malpractice (Mahul and Stutley 2010). Low demand for crop insurance products in developing countries is also a problem, and it raises the question of sustainability and viability (Linnerooth-Bayer, 2011).…”

Section: Introductionmentioning

confidence: 99%

When implementation goes wrong: Lessons from crop insurance in India

Nirmal¹,

Babu²

2021

View full text Add to dashboard Cite

The International Food Policy Research Institute (IFPRI), a CGIAR Research Center established in 1975, provides research-based policy solutions to sustainably reduce poverty and end hunger and malnutrition. IFPRI's strategic research aims to foster a climate-resilient and sustainable food supply; promote healthy diets and nutrition for all; build inclusive and efficient markets, trade systems, and food industries; transform agricultural and rural economies; and strengthen institutions and governance. Gender is integrated in all the institute's work. Partnerships, communications, capacity strengthening, and data and knowledge management are essential components to translate IFPRI's research from action to impact. The institute's regional and country programs play a critical role in responding to demand for food policy research and in delivering holistic support for country-led development. IFPRI collaborates with partners around the world.

show abstract

A test on adverse selection of farmers in crop insurance: Results from Inner Mongolia, China

Cited by 12 publications

References 13 publications

Risk aversion level influence on farmer's decision to participate in crop insurance: A review

Risk aversion level influence on farmer's decision to participate in crop insurance: A review

Asymmetric Information And Farmer’s Participation In Tobacco Contract Farming

When implementation goes wrong: Lessons from crop insurance in India

Contact Info

Product

Resources

About