A Double-hurdle Model Estimation of Smallholder Commercial Farmers’ Willingness to Adopt Crop Insurance in Zimbabwe: A Case of Mazowe district
- October 21, 2020
- Posted by: RSIS Team
- Categories: Agriculture, Economics, IJRSI
International Journal of Research and Scientific Innovation (IJRSI) | Volume VII, Issue IX, November 2020 | ISSN 2321–2705
Raynold Runganga, Clever Mumbengegwi
Department of Economics, University of Zimbabwe, Mt Pleasant. Harare, Zimbabwe.
Abstract: As a result of frequent climatic hazards, crop insurance has become an effective risk mitigating tool in agriculture, ease immediate financial pressure of a poor harvest and prevent poor smallholder commercial farmers from getting poorer. This study examined the determinants of crop insurance adoption by Smallholder Commercial Farmers using farm-level data from Mazowe district in Mashonaland Central Province of Zimbabwe. Based on three wards which were selected purposively, 165 farmers were randomly selected and interviewed using self-administered questionnaires. The double hurdle model was employed, based on 150 farmers who reported to be growing similar crops, which are maize, tobacco and soya-bean. Econometric results of the double-hurdle model revealed that income, subsidies, knowledge on crop insurance,, perception on risk, farm size, farming experience and education positively influence crop insurance adoption and extent of adoption by smallholder commercial farmers. On the other hand, the results also reveal that age negatively influence the adoption and extent of adoption of crop insurance. Thus, policy interventions that aim to increase crop insurance adoption by farmers such as involuntary insurance coverage for farmers that receive inputs on credit from the government are required. Furthermore, insurance scheme providers and agricultural extension agents should add more effort in undertaking awareness campaigns and education about the benefits of crop insurance and assist farmers on any aspect of crop insurance.
Keywords: Smallholder Commercial Farmers, Crop insurance, Double-hurdle model.
I. INTRODUCTION
Crop insurance is considered to be an effective risk management tool in farming (Tsikirayi et al., 2013). It reduces the effects on farmers of adverse outcomes arising from climatic and other natural hazards. When insured risk occurs, Smallholder Commercial Farmers (SHCFs) get reimbursed a portion of their upfront investment,
