Components Affecting Production Risk Management on Agricultural Crops Insurance Adoption (Case Study: Maize Farmers of Moghan Plain)

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SOOKHTANLOU M.

Title

Components Affecting Production Risk Management on Agricultural Crops Insurance Adoption (Case Study: Maize Farmers of Moghan Plain)

Author(s)

SOOKHTANLOU M. | Issue Writer Certificate

Keywords

Crop insuranceQ3

Degree of risk aversionQ1

Maize farmersQ1

Moghan PlainQ1

Risk managementQ2

Abstract

Introduction: Moghan Plain (Ardabil province) always has been considered as one of the important pillars of agriculture in Iran. However due to the new climatic changes, increasing occurrence of phenomena such as drought and reduction of water resources, and spread of pests and weeds, farmers facing with the phenomenon of risk as a major challenge in the region. Farmers will be obliged to make decisions about allocating resources to their agricultural productions which facing environmental conditions and different biotic and abiotic risks, as ambient conditions, the status of inputs and outputs prices and their agronomic performance, are not stable enough. Finally, these conditions influence farmers' agronomic decisions which under such circumstances the results of farmers' decision making are different from the results in safer conditions. There are also different values of inputs consumption in risky and safe agricultural conditions and these values also depend on other factors such as variance of the product price, the Degree of risk aversion and the marginal share of inputs in production variance as well as outputs and inputs prices and production levels. In this regard, agricultural Crop insurance is one of the major management strategies to overcome agricultural risks, weather and other unavoidable natural hazards. Risk management is an appropriate management of operational unit with awareness and understanding of the environment and risky factors. It is actually one of the ways to increase productivity of production factors and to improve the efficiency of farming operation systems through making suitable decisions about controlling risk factors and resources. Therefore, increasing range of production risk and the importance of agricultural crops insurance of maize production in Moghan Plain led to investigate and determine the effects of agricultural crops insurance adoption on the components of production Risk management among the Maize farmers of Moghan Plain. Materials and Methods: This study is an applied one based on descriptive-correlative method that was designed and implemented in 2016-2017. Study area was Moghan Plain that it located in the northern part of Ardabil province. Sampling method was multi-stage and applying the Yamane (1967) formula. Data including sample size of 278 Maize farmers in 9 villages were collected. The research instrument was a questionnaire including 69 items in three sections (personal and professional characteristics, determining risk aversion coefficient and Risk management components). Items of questionnaire were composed of personal and professional characteristics of respondents (18 items), variables determining risk aversion coefficient (19 items) and Risk management components (32 items). Risk management components were consisting of planting Risk management (5 items), maintenance Risk management (5 items), harvest Risk management (4 items), Risk management of economics and marketing (5 items), Risk management of farm and technical infrastructure (7 items) and the risk-sharing management (6 items). Items of Risk management components with equal weights were collected in the five-part Likert scale (the range of 1 (very low) to 5 (very much)). To calculate the risk aversion coefficient and the risk sentiments in Maize farmers' decision-making, we used safety first rule (SFR). For the final analysis of the main purpose of the research was to use the binary logistic regression method in step-by-step approach. Results and Discussion: According to study results, Maize farmers with different risk aversion coefficient, includes four groups as follow: 1: risk-taker (15. 1% of respondents); 2: risk-neutral (19. 8% of respondents); 3: low risk-averse (37. 4% of respondents) and 4: high risk-averse (27. 7% of respondents). There was also a significant difference between the adopter and non-adopter Maize farmers of insurance based on the Degree of risk aversion. In other words, non-adopter Maize farmers of insurance had significantly higher risk aversion compared to adopter Maize farmers of insurance. Based on the results of logistic regression, from among 17studied factors in eight steps, only 8 components including education (B = 0. 254), average annual agricultural income (B= 0. 68), number of agricultural risks (B =0. 361) and risk-sharing management (B=0. 447) at 5% level, and Risk management variables of economics and marketing (B= 0. 492), planting Risk management (B = 0. 382) and Risk management of farm and technical infrastructure (B = 0. 617) at 1% level were positive and significant. But for the component of age (B=-0. 142) a negative and significant relationship at the 5% level was found. The results of calculating the risk aversion coefficient showed that majority of Maize farmers were riskaverse (65. 1%). Also, the adopter Maize farmers of insurance were significantly less risk aversion than nonadopter Maize farmers of insurance. Many number of Maize farmers in the area are small-holder farmers (mean of farm lands size equals 5. 0054 hectares). The smallholder farmers compared to other farmers are very vulnerable facing with the agricultural risks, so this leads to high risk eversion level of Maize farmers in the study area compared to other farmers. Also, the adopter Maize farmers of insurance were significantly less risk aversion than non-adopter Maize farmers of insurance. The results of logistic regression showed that among various types of Risk management components, planting Risk management (Wald: 0. 382), Risk management of economics and marketing (Wald: 0. 492), Risk management of farm and technical infrastructure (Wald: 0. 617) and risk-sharing management (Wald: 0. 447) had the positive and significant effects on agricultural crops insurance adoption.

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APA: Copy

SOOKHTANLOU, M.. (2019). Components Affecting Production Risk Management on Agricultural Crops Insurance Adoption (Case Study: Maize Farmers of Moghan Plain). JOURNAL OF ECONOMICS AND AGRICULTURE DEVELOPMENT, 32(4 ), 299-311. SID. https://sid.ir/paper/141981/en

Vancouver: Copy

SOOKHTANLOU M.. Components Affecting Production Risk Management on Agricultural Crops Insurance Adoption (Case Study: Maize Farmers of Moghan Plain). JOURNAL OF ECONOMICS AND AGRICULTURE DEVELOPMENT[Internet]. 2019;32(4 ):299-311. Available from: https://sid.ir/paper/141981/en

IEEE: Copy

M. SOOKHTANLOU, “Components Affecting Production Risk Management on Agricultural Crops Insurance Adoption (Case Study: Maize Farmers of Moghan Plain),” JOURNAL OF ECONOMICS AND AGRICULTURE DEVELOPMENT, vol. 32, no. 4 , pp. 299–311, 2019, [Online]. Available: https://sid.ir/paper/141981/en

Scientific Information Database

ISSN: 2588-4824

Journal Paper

Components Affecting Production Risk Management on Agricultural Crops Insurance Adoption (Case Study: Maize Farmers of Moghan Plain)