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Demand for Crop Insurance by Tea Smallholders in Badulla District: An Analysis of Willingness-To-Pay

Authors:

Y. S. M. M. P. Yallarawa,

University of Peradeniya, Peradeniya, LK
About Y. S. M. M. P.
Postgraduate Institute of Agriculture
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D. V. P. Prasada

University of Peradeniya, Peradeniya, LK
About D. V. P.
Department of Agricultural Economics and Business Management, Faculty of Agriculture
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Abstract

Tea growers face many risks due to weather conditions, plant diseases, price volatility and policy changes. Crop insurance is one of the potential management tools to manage these risks. The purpose of this paper was to investigate the demand for tea crop insurance with respect to factors affecting the decision to adopt insurance for tea cultivation. Data was collected from 150 tea smallholder farmers randomly selected from three Divisional Secretariat divisions. Conjoint choices were used to elicit preference for attributes of insurance. The insurance policy was defined by four attributes: damage assessment rule (index-based, indemnity-based), type of damage (drought, non-drought), premium, and mode of compensation (by money, by plants). Data was analysed using logistic models. According to the results, age of the farmer, gender, age of cultivation, and asset level were the variables that influenced the willingness to adopt insurance. Drought damage, monetary compensation, low monthly yield, high cost of production and extension services were significant variables that influenced the level of premium. On the other hand, the significant variables that influenced willingness to buy index based insurance were drought damage, monetary compensation, age of farmer, and high asset ownership.
How to Cite: Yallarawa, Y.S.M.M.P. and Prasada, D.V.P., 2020. Demand for Crop Insurance by Tea Smallholders in Badulla District: An Analysis of Willingness-To-Pay. Tropical Agricultural Research, 31(3), pp.1–10. DOI: http://doi.org/10.4038/tar.v31i3.8392
Published on 30 Jun 2020.
Peer Reviewed

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