Determinant Factors for Cattle Insurance as a Risk Management Strategy

Abstract

Cattle farmers in Gunungkidul Regency face several cattle diseases such as Helminthiasis, Anthrax, Downer Cow Syndrome, and Intoxication in which these diseases mostly attack female cows. To prevent financial loss for the farmers, the government facilitates them with cattle insurance. This study aims to determine the reasons and the cattle farmers’ willingness-to-pay for the cattle insurance by conducting a survey addressed to 100 cattle farmers and identifying the factors related to it. This study used a Contingent Valuation Method in estimating the cattle farmer's WTP. The various factors that influence the farmer's WTP were analyzed by using natural logarithm regression models. Based on the results of the study, it was found that the willingness-to-pay for cattle farmers who did not participate in cattle insurance are 22,600 IDR and farmers who participate in cattle insurance are 36,320 IDR. Education, household income, and farmers’ interest in the insurance were positively effecting toward the farmers' willingness-to-pay. However, age and the number of families showed the negative ones toward the farmers’ willingness-to-pay.

Factors Affecting Farmers’ Willingness to Pay for Agricultural Insurance: A Literature Survey (2004-2023)

“…Previous literature indicates that the age of farmers had a beneficial influence on their willingness to pay for livestock insurance in 15 investigations (Adjabui et al, 2019;Akintunde, 2015;Ali, 2013;Danso-Abbeam et al, 2014;Dong, Jimoh, Hou, & Hou, 2020;Ghazanfar, Wen, Abdullah, Ahmad, & Khan, 2015;Indra, Ula, & Nugroho, 2023;Jimoh Ibitoye, 2012;Kurniaty, Masyhuri, & Jamhari, 2021;Liu, Hou, Li, Min, & Mu, 2021;Manja, Chirwa, & Kambewa, 2015;Mensah et al, 2023;Musonda, 2012;Shang & Xiong, 2021;Teweldemedhin & Kafidi, 2009), while these 19 research revealed that older farmers were less likely to pay for livestock insurance, it was not clear why this was the case. (Abebe & Bogale, 2014;Aina et al, 2018;Amin, Abdullahi, Suryani, & Alias, 2014;Arshad et al, 2016;Dahal, Adhikari, & Khanal, 2022;Hill, Hoddinott, & Kumar, 2013;Kwadzo et al, 2013;Madaki et al, 2023;Mahboob, Rehman, Hamid, & Saeed, 2019;Mbonane & Makhura, 2018;Mutaqin & Usami, 2019;Nugrahaini, Masyhuri, & Suryantini, 2021;Oduniyi, Antwi, & Tekana, 2020;Ramasubramanian, 2012;Sadati et al, 2010;Sami, 2017;Singh, 2017;Sujarwo, 2017;Xiu, Xiu, & Bauer, 2012). These 8 studies found a negative effect of sex/gender on WTP for agriculture insurance " (Akintunde, 2015;…”

“…The more the chances to be willing to insure, the more educated the farmer is. Education positively influenced the propensity of farmers to pay for livestock insurance, according to these 23 studies " (Aina et al, 2018;Akintunde, 2015;Ali, 2013;Danso-Abbeam et al, 2014;Dong et al, 2020;Ellis, 2016;Ghazanfar et al, 2015;Gulseven, 2020;Indra et al, 2023;Jimoh Ibitoye, 2012;Kurniaty et al, 2021;Madaki et al, 2023;Manja et al, 2015;Mehmood, Ullah, e Ali, Baber, & Ashraf, 2022;Mohammed & Ortmann, 2005;Musonda, 2012;Mutaqin & Usami, 2019;Nugrahaini et al, 2021;O'Reilly, Bishu, Lahiff, & Gebregziabher, 2018;Sami, 2017;Singh, 2017;Suharyanto, Ansyor, & Hidayat, 2021;Sujarwo, 2017)" whereas 13 studies have demonstrated a negative correlation between education and farmers' "willingness to pay for livestock insurance (Adjabui et al, 2019;Arshad et al, 2016;Dahal et al, 2022;Khan, Chander, & Bardhan, 2013;Kwadzo et al, 2013;Mahboob et al, 2019;Mbonane & Makhura, 2018;Mensah et al, 2023;Nyaaba et al, 2019;Oduniyi et al, 2020;Shang & Xiong, 2021;Teweldemedhin & Kafidi, 2009;Xiu et al, 2012)". Sadati et al (2010) found a positive effect of literacy on the adoption of crop insurance.…”

“…Literature has also highlighted the role of household size as a determinant of WTP for livestock insurance. According to the literature review, household size had negative impact on WTP for agriculture insurance in 11 studies (Adjabui et al, 2019;Chand, Kumar, Bhattarai, & Saroj, 2016;Danso-Abbeam et al, 2014;Gulseven, 2020;Mensah et al, 2023;Musonda, 2012;Nugrahaini et al, 2021;Nyaaba et al, 2019;Ramasubramanian, 2012;Sadati et al, 2010;Sami, 2017) while had positive impact on WTP for insurance in 14 studies (Aina et al, 2018;Akintunde, 2015;Ali, 2013;Arshad et al, 2016;Budhathoki et al, 2019;Jimoh Ibitoye, 2012;Kwadzo et al, 2013;Liu et al, 2021;Madaki et al, 2023;Mbonane & Makhura, 2018;Mehmood et al, 2022;Shang & Xiong, 2021;Subedi & Kattel, 2022;Sujarwo, 2017).…”

“…Nearly 17 studies (Abebe & Bogale, 2014;Ali, 2013;Arshad et al, 2016;Budhathoki et al, 2019;Ghazanfar et al, 2015;Gulseven, 2020;Jimoh Ibitoye, 2012;Kurniaty et al, 2021;Mahboob et al, 2019;Mensah et al, 2023;Musonda, 2012;Nugrahaini et al, 2021;O'Reilly et al, 2018;Otieno et al, 2006;Sadati et al, 2010;Shang & Xiong, 2021;Subedi & Kattel, 2022) have reported the positive effect of income or farm income on WTP for agricultural insurance, while only two studies (Ellis, 2016;Mehmood et al, 2022) in contrast.…”

“…According to the findings of Adjabui et al (2019), the revenue obtained from maize had a beneficial impact on the desire of farmers to enroll in crop insurance. According to Nugrahaini et al (2021) the amount of income generated from cattle had a negative effect on the participants' willingness to pay for insurance on their animals.…”