Socio-economic factors that influence adoption of crop insurance among farmers in Lusaka Province, Zambia

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Musonda, Martha Bwile
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University of Zambia
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.
Student Project Report
Crop Insurance-Lusaka, Zambia