Determinants of agricultural insurance adoption: evidence from farmers in the state of São Paulo, Brazil

Abstract

Purpose The purpose of this study is to investigate the determinants of agricultural insurance adoption by farmers of the state of São Paulo, Brazil. Design/methodology/approach Primary data from the 2015/2016 crop season was collected from a sample of 175 farmers. Logit econometric models were applied to identify the variables that affect the probability of agricultural insurance adoption. Findings The empirical results show that the education level, access to technical assistance, use of management tools and farm size positively affect the probability of adopting agricultural insurance. In addition, farmers who produce soybean and/or corn are more likely to use insurance. On the other hand, the higher the farmers’ propensity to take risk the lower the likelihood of using insurance. Research limitations/implications The empirical analysis is based on cross-sectional data of a sample of 175 farmers of the state of São Paulo. The use of panel data with a larger sample of farmers, considering a period of years, could provide additional information. Originality/value To the best of the knowledge, this is the first empirical analysis about determinants of agricultural insurance adoption by Brazilian farmers, considering behavioral factors. The findings provide useful insights for policymakers in formulating risk management programs in the Brazilian agricultural markets. A better understanding about the determinants of insurance adoption is also relevant for private companies that sell insurance to farmers. Therefore, the paper may contribute with the diffusion of rural insurance as risk management tool in Brazilian agriculture.

Prospects, determinants and profitability of aquaculture insurance among fish farmers in the Eastern Region of Ghana

“…Farayola et al (2013) indicated that extension service access is essential in determining agricultural insurance participation because the education extended by extension agents is likely to influence participation on the same. The result is in agreement with Carrer et al (2020) who reported a positive association between private technical assistance and agricultural insurance adoption. Credit access was positive and significantly different from zero on aquaculture insurance participation and amount intensity.…”

“…A plausible reason could be that, although they (farmers) increase in experience, their proficiency on aquaculture insurance is not leveraged. Carrer et al (2020) and Akinola (2014) that, as farmer's farm income increases, they are more likely to participate in aquaculture insurance by about 30%. However, decreases the amount intensity by GH¢ 2.846 (US$ 0.482).…”

Parameters that Motivate Table Olive Farmers To Buy Agricultural Insurance: The Case of Western Turkey

“…Using logit econometric models, Carrer et al. ( 2020 ) analyzed determinants affecting the purchase of agricultural insurance in a study of farmers in São Paulo, Brazil. The results suggest that a farmer’s education, access to technical assistance, ability to use management tools, and farm size have positive effects on the likelihood of buying agricultural insurance.…”

“…Carrer et al. ( 2020 ) defined factors that affect farmers’ willingness to purchase agricultural insurance in São Paulo, Brazil, finding that such factors include education, farm size, access to technical assistance, and whether a farmer uses management tools.…”

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“…Por isso, o acesso ao crédito rural e a fontes alternativas de financiamento é amplamente identificado como um determinante da adoção de tecnologias (Carrer et al, 2013b;2020a;Souza Filho et al, 2021;Jara-Rojas et al, 2020). O risco de mercado e de produção é inerente à adoção de algumas tecnologias, o que remete à necessidade de acesso a seguro rural e outros mecanismos de gestão de risco (Carrer et al, 2013a(Carrer et al, , 2020b. O tamanho da propriedade rural confere certa flexibilidade para lidar com o risco, além de gerar economias de escala (Dhakal et al, 2015;Hu et al, 2022;Souza Filho et al, 2021;Vinholis et al, 2017).…”