Socio-economic factors that influence adoption of crop insurance among farmers in Lusaka Province, Zambia
Date
2012
Authors
Musonda, Martha Bwile
Journal Title
Journal ISSN
Volume Title
Publisher
University of Zambia
Abstract
The agriculture sector is characterized by a strong exposure to risk. Unlike the industrial sector, it
is subject to the vagaries of the weather. The variations in productivity induced by nature cannot be
fully accommodated by farmers. Since time in memorial, farmers have devised measures to limit
these risks such as; crop rotation and diversification, inter-cropping, use of low yield but hardy
varieties and the development of non-farm sources of income. While these measures continue to be
helpful, the problem of residual risks remains. The modem insurance sector can play a major role
here, and considerably strengthen the security of farmers. Incidence of risk in agriculture is
important to policy makers. Fluctuations in producer's income and the threat of catastrophic losses
in particular can present difficult welfare problems for producers and national governments. The
purpose of this study was to identify the socio-economic factors that influence the adoption of crop
insurance among farmers in Chongwe and Makeni farming areas in Zambia's Lusaka Province.
The sample size was 78 respondents and questioimaires were used to collect data. The probit
model was employed to analyze and discuss the social and economic factors. The factors studied
included household size, crop insurance knowledge, farming experience, credit use, age, education
level, adequate access to knowledge on crop insurance, farm size, knowledge on premium rates,
monthly income, land ownership, non farm income and the scale of farming. The factors which
were identified as being statistically significant at 95% confidence level (with the probit model)
were; household size (P-value = 0.006), crop insurance knowledge (P-value = 0.000), farming
experience (P-value = 0.001), credit use (P-value = 0.034), age (P-value = 0.037) and education
level (P-value = 0.011).
Descriptive statistics were also employed to look at the challenges faced by farmers in accessing
crop insurance. The results of the study showed that the amount of paper work involved in
accessing crop insurance, lack of visits by insurance extension officers, inadequate access to
information on crop insurance and the long distance from farm area to the nearest insurance
company were the major challenges faced.
The recommendations were that insurance companies should work on sensitizing farmers on crop
insurance so as to improve their understanding of the program of insurance and also to improve
linkages between insurance companies and banks and other organizations.
Description
Student Project Report
Keywords
Crop Insurance-Lusaka, Zambia