Agricultural production, natural hazards and risks: an analysis of coping mechanisms and the potential of crop insurance
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Date
2004
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Publisher
Sokoine University of Agriculture
Abstract
The study examined natural hazard risks, coping mechanisms and potential for crop
insurance on bean farmers in Arumeru district, Arusha region. Objectives were to
determine natural hazard risk sources and available coping mechanisms, assess
riskiness of various natural hazards, potential of crop insurance and determine factors
influencing its preference. Data collection was through formal surveys to 116 farmers
and 8 insurance companies, supplemented by informal interviews with various experts
from the Directorate of Insurance, National Insurance Company, agricultural officers at
the Ministry of Agriculture, Dar es salaam and extension officers at Kwa Ugoro,
Malula/Kolila and Kikatiti villages. Qualitative analytical techniques included
descriptive methods such as cross tabulations, means, percentages, frequencies,
standard deviations and risk analysis using a structured questionnaire. Quantitative
methods included Gross Margin (GM) analysis, Pearson Chi square (X2), one way
Analysis of Variance (ANOVA) and Regression analysis. Natural hazards were found
to be location specific and their riskiness was significantly different (different levels)
across villages. Coping mechanisms were found to be imperfectly effective in
managing natural hazard risks signifying a need for a risk transfer device, like crop
insurance. Crop insurance was favoured by 76.7 percent of the respondents and ranked
second in preference as a risk management method. Pests and diseases were the
riskiest followed by drought. Positive margins were recorded to 72.4 percent of the
respondents. Ability to meet insurance costs was thus high. Farmers’ preference for
crop insurance was confirmed and, unexpectedly, wealth status was the only significant
factor that influenced it positively. Insurers were however sceptical about its feasibility.
Pilot crop insurance scheme as a precursor to a full-fledged scheme in future and'
further market research studies to establish more potential for crop insurance are recommended. Agricultural schools and colleges are urged to include crop insurance in
their curricular to stimulate its awareness.
Description
Masters Dissertation
Keywords
Natural hazards, Agricultural production, Bean farmers, National Insurance Company