An empirical analysis of the effect of crop insurance on farmers’ income: results from Inner Mongolia in China

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

doi:10.1108/caer-05-2014-0045

Cited by 26 publications

(32 citation statements)

References 12 publications

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“…Ifft et al (2014) showed that farm value increased when fields are insured. Kuethe and Morehart (2012) proved that crop insurance improved farmlevel profit in the USA while Zhao et al (2016) did not demonstrate such effect in China. By contrast, only one study by Roberts et al (2003) considered the influence of crop insurance on pesticide use with contrasted results according to the crops considered: they reported a modest reduction of chemical input applications on tobacco and cotton crops and a modest increase on corn.…”

Section: Two Widely Used Risk Management Instruments: Crop Insurance and Pesticidesmentioning

confidence: 97%

“…More specifically, we use difference-in-differences methods and propensity score matching because these methods allow simulating a controlled experiment (Antonakis et al 2010). They have already been used in the literature to measure the effects of crop insurance on debt use (Ifft et al 2015), on profit (Kuethe and Morehart 2012;Zhao et al 2016), and on farm value (Ifft et al 2014). Using this method, we propose to test whether crop insurance purchase has or does not have a negative influence on pesticide expenses and to compare the observed trend with non-insured farmers.…”

Section: Introductionmentioning

confidence: 99%

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How does crop insurance influence pesticide use? Evidence from French farms

Enjolras

Aubert

2020

Rev Agric Food Environ Stud

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The purpose of this paper is to examine how crop insurance influences pesticide use, the two decisions being strategic for risk management at the farm scale. To that aim, the paper implements propensity score matching, difference-in-differences models, and a combination of these two methods in order to compare two similar populations of insured and non-insured farmers. Using data from the Farm Accountancy Data Network (FADN), we consider French farms which cultivate field crops and quality wine-growing, the two main productions that participate the most to crop insurance and that use intensively pesticides. The analysis is performed between 2008 and 2012 given a strategic change in the crop insurance system in 2010 that strongly incites farmers to purchase crop insurance with private companies. At the same time, pesticide use was progressively discouraged through public policies. Estimations show that while pesticide use decreases for all crops, the purchase of crop insurance policies has no impact for field crops and quality wine-growing. Meanwhile, the land allocated to each crop within the farm changes. These results question a possible substitutability, for some productions, between crop insurance and pesticides as risk management tools.

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Section: Two Widely Used Risk Management Instruments: Crop Insurance and Pesticidesmentioning

confidence: 97%

Section: Introductionmentioning

confidence: 99%

How does crop insurance influence pesticide use? Evidence from French farms

Enjolras

Aubert

2020

Rev Agric Food Environ Stud

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“…Since 2004, policy-based, multiperil crop insurance (MPCI) has developed rapidly with government fiscal support in China (Wang et al 2011;Xiao and Yao 2019). But the MPCI's sustainability is plagued by high administrative costs, moral hazard, and adverse selection (Berhane et al 2013;Zhao et al 2016;Ye et al 2017). Index-based insurance indemnifies policyholders based on the observed value of an ''index'' that is highly correlated with losses.…”

Section: Introductionmentioning

confidence: 99%

Farmers’ Demand for Informal Risk Management Strategy and Weather Index Insurance: Evidence from China

Tang

Cai

Liu

2021

Int J Disaster Risk Sci

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In the absence of formal risk management strategies, agricultural production in China is highly vulnerable to climate change. In this study, field experiments were conducted with 344 households in Heilongjiang (Northeast China) and Jiangsu (East China) Provinces. Probit and logistic models and independent sample T-test were used to explore farmers’ demand for weather index insurance, in contrast to informal risk management strategies, and the main factors that affect demand. The results show that the farmers prefer weather index insurance to informal risk management strategies, and farmers’ characteristics have significant impacts on their adoption of risk management strategies. The variables non-agricultural labor ratio, farmers’ risk perception, education, and agricultural insurance purchase experience significantly affect farmers’ weather index insurance demand. The regression results show that the farmers’ weather index insurance demand and the influencing factors in the two provinces are different. Farmers in Heilongjiang Province have a higher participation rate than those in Jiangsu Province. The government should conduct more weather index insurance pilot programs to help farmers understand the mechanism, and insurance companies should provide more types of weather index insurance to meet farmers’ diversified needs.

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“…It was found that RAL has an important role to play in farmer decision to purchase crop insurance and in their participation in agricultural contracts (Vassalos and Li 2016). In addition, farmers' decision to buy insurance is influenced by insurance experience, farming experience, age, cropland area, harvest failure experience (Zhao et al 2016).…”

mentioning

confidence: 99%

“…The compensation can be used by farmers as capital for farming in the following season. Zhao et al (2016) used Propensity Score Matching (PSM) to assess the impact of farmer participation in crop insurance on farmer income in China. PSM involves an analysis of factors that influence farmer decision to participate in crop insurance by using a logistic regression model.…”

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confidence: 99%

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

Yanuarti¹,

Aji²,

Rondhi³

2019

Agric. Econ. - Czech

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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.

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An empirical analysis of the effect of crop insurance on farmers’ income: results from Inner Mongolia in China

Cited by 26 publications

References 12 publications

How does crop insurance influence pesticide use? Evidence from French farms

How does crop insurance influence pesticide use? Evidence from French farms

Farmers’ Demand for Informal Risk Management Strategy and Weather Index Insurance: Evidence from China

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

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