Factors affecting crop insurance decision
Farmers are constantly facing changes, and the exposure to risk requires monitoring these changes. Financial risks, institutional risks, market risks and production risks are the different risk categories that the farmers face. Production risks stems from factors the farmer cannot affect or is beyon...
| Autores principales: | , |
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| Formato: | Second cycle, A2E |
| Lenguaje: | sueco Inglés |
| Publicado: |
2014
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| Materias: | |
| Acceso en línea: | https://stud.epsilon.slu.se/7237/ |
| _version_ | 1855571148837748736 |
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| author | Brånstrand, Filip Wester, Fredrik |
| author_browse | Brånstrand, Filip Wester, Fredrik |
| author_facet | Brånstrand, Filip Wester, Fredrik |
| author_sort | Brånstrand, Filip |
| collection | Epsilon Archive for Student Projects |
| description | Farmers are constantly facing changes, and the exposure to risk requires monitoring these changes. Financial risks, institutional risks, market risks and production risks are the different risk categories that the farmers face. Production risks stems from factors the farmer cannot affect or is beyond his control. The crop’s output is the basis for the primary income of agricultural operations, which is why it is important for farmer to manage their production risk.
A tool to reduce the consequences of production risks is crop insurance. In a global perspective, governments manage production risk in many different ways. Some countries provide compensation for yield loss and some subsidized crop insurance programs. Some countries, including Sweden, have submitted the responsibility to the private sector which provides the agricultural sector with crop insurances.
Swedish farmers have faced a larger variation in yield levels which indicate a higher risk exposure. This may depend on changes in the climate. The range of crop insurance in Sweden is limited to reseeding and hail insurance provided by private companies. Since the Swedish farmer is constantly exposed to risk, an incentive for them is provided to use crop insurance can be observed. Hence the he purpose of this study is to identify the factors that are associated with the Swedish farmers’ choice of crop insurance.
To evaluate the Swedish farmers’ decision to use crop insurance the expected utility theory is used. A model is developed to evaluate the factors that may affect the choice to purchase or not. The factors affecting crop insurance use have in this study been divided into three different categories; social factors, business related factors and preferences and perceptions. A survey was conducted of Swedish farmers to identify factors that were analyzed with the logit method.
The results show that the statistical significance level differs greatly between different attributes with each category. The business related factors indicate that larger farms and farms with grain production as primary crop to a greater extent use insurance. Farmers with high level of diversification do not use crop insurance to the same extent as less diversified. This indicates that farmers with high risk expose are more likely to acquire insurance. The design of the insurance product is also found to be important for the insurance decision.
Farmers that use insurance perceive that their yield level is higher than the average for their region. They also perceive a higher level of yield risk compared to uninsured farmers. The social factors, age, education and years of farming as well the farmers’ risk preferences do not indicate any statistically significance for the crop insurance decision. |
| format | Second cycle, A2E |
| id | RepoSLU7237 |
| institution | Swedish University of Agricultural Sciences |
| language | Swedish Inglés |
| publishDate | 2014 |
| publishDateSort | 2014 |
| record_format | eprints |
| spelling | RepoSLU72372014-09-09T10:33:30Z https://stud.epsilon.slu.se/7237/ Factors affecting crop insurance decision Brånstrand, Filip Wester, Fredrik Economics and management Farmers are constantly facing changes, and the exposure to risk requires monitoring these changes. Financial risks, institutional risks, market risks and production risks are the different risk categories that the farmers face. Production risks stems from factors the farmer cannot affect or is beyond his control. The crop’s output is the basis for the primary income of agricultural operations, which is why it is important for farmer to manage their production risk. A tool to reduce the consequences of production risks is crop insurance. In a global perspective, governments manage production risk in many different ways. Some countries provide compensation for yield loss and some subsidized crop insurance programs. Some countries, including Sweden, have submitted the responsibility to the private sector which provides the agricultural sector with crop insurances. Swedish farmers have faced a larger variation in yield levels which indicate a higher risk exposure. This may depend on changes in the climate. The range of crop insurance in Sweden is limited to reseeding and hail insurance provided by private companies. Since the Swedish farmer is constantly exposed to risk, an incentive for them is provided to use crop insurance can be observed. Hence the he purpose of this study is to identify the factors that are associated with the Swedish farmers’ choice of crop insurance. To evaluate the Swedish farmers’ decision to use crop insurance the expected utility theory is used. A model is developed to evaluate the factors that may affect the choice to purchase or not. The factors affecting crop insurance use have in this study been divided into three different categories; social factors, business related factors and preferences and perceptions. A survey was conducted of Swedish farmers to identify factors that were analyzed with the logit method. The results show that the statistical significance level differs greatly between different attributes with each category. The business related factors indicate that larger farms and farms with grain production as primary crop to a greater extent use insurance. Farmers with high level of diversification do not use crop insurance to the same extent as less diversified. This indicates that farmers with high risk expose are more likely to acquire insurance. The design of the insurance product is also found to be important for the insurance decision. Farmers that use insurance perceive that their yield level is higher than the average for their region. They also perceive a higher level of yield risk compared to uninsured farmers. The social factors, age, education and years of farming as well the farmers’ risk preferences do not indicate any statistically significance for the crop insurance decision. Lantbrukare påverkas ständigt av förändringar och exponeringen av eventuella risker kräver att dessa förändringar övervakas. Finansiella risker, institutionella risker, marknadsrisker och produktionsrisker är olika kategorier av risker som lantbrukare kan ställas inför. Produktions-risker uppstår av faktorer som lantbrukarna inte kan påverka själva eller som är utanför deras kontroll. Produktionen från grödorna är basen för den primära inkomsten för jordbruks-verksamheten. Därför är det viktigt för lantbrukare att kunna hantera eventuella produktions-risker. Ett verktyg för att reducera konsekvenserna av produktionsrisker är grödaförsäkring. Från ett globalt perspektiv, hanterar regeringar produktionsrisker på olika sätt. En del länder tillhanda-håller kompensation för skördeförlust medan andra länder subventionerar grödaförsäkrings-program. Vissa länder, inklusive Sverige, har lämnat ansvaret till den privata sektorn som tillhandahåller jordbruket med grödaförsäkring. Svenska lantbrukare har mer och mer upplevt större variationer i skördekvantitet, vilket indikerar en högre utsatthet för risk. Detta kan exempelvis bero på förändringar i klimatet. Utbudet av grödaförsäkringar i Sverige är begränsat till omsåddsförsäkring och hagel-försäkring från privata företag. Eftersom svenska lantbrukare konstant är utsatta för risk, har det uppstått behov för dem att använda grödaförsäkring. Därför är syftet med denna studie att identifiera de faktorer som associeras med svenska lantbrukares beslut om grödaförsäkring. För att undersöka svenska lantbrukares beslut att använda grödaförsäkring används förväntad nyttoteori. En modell upprättades för att undersöka vilka faktorer som kan påverka beslutet att teckna försäkring eller inte. Faktorerna som påverkar användningen av försäkringar är i den här studien indelade i tre kategorier; sociala faktorer, företagsrelaterade faktorer samt preferenser och uppfattningar. En enkät skickades ut till svenska lantbrukare för att identifiera faktorerna. Dessa analyserades sedan med logit modellen. Resultaten visar att den statistiska betydelsen av olika faktorer skiljer sig åt. De företags-relaterade faktorerna indikerar att användningen av grödaförsäkring är mest frekvent på större gårdar med spannmålsproduktion. Lantbrukare med hög grad av diversifiering använder inte försäkringar i samma utsträckning som de mindre diversifierade lantbrukarna. Detta indikerar att lantbrukare med högre utsatthet för risk är mer villiga att teckna försäkring. Det visar sig också att utformingen av försäkringsprodukten är viktig för beslutet att teckna försäkring. Lantbrukare vill ha möjlighet att få ett omfattande försäkringsskydd. Denna studie visar att lantbrukare som använder försäkringar upplever att deras skördenivå är högre än den normala för regionen. De upplever också en högre skörderisk jämfört med oförsäkrade lantbrukare. De sociala faktorerna ålder, utbildning och antalet år som lantbrukare, har ingen statistik betydelse för beslutet att teckna grödaförsäkring. Lantbrukarnas riskpreferenser visar sig heller inte ha någon statistisk betydelse. 2014-09-05 Second cycle, A2E NonPeerReviewed application/pdf sv https://stud.epsilon.slu.se/7237/1/Branstrand_et_al_140903.pdf Brånstrand, Filip and Wester, Fredrik, 2014. Factors affecting crop insurance decision : a survey among Swedish farmers. Second cycle, A2E. Uppsala: (NL, NJ) > Dept. of Economics <https://stud.epsilon.slu.se/view/divisions/OID-510.html> urn:nbn:se:slu:epsilon-s-3701 eng |
| spellingShingle | Economics and management Brånstrand, Filip Wester, Fredrik Factors affecting crop insurance decision |
| title | Factors affecting crop insurance decision |
| title_full | Factors affecting crop insurance decision |
| title_fullStr | Factors affecting crop insurance decision |
| title_full_unstemmed | Factors affecting crop insurance decision |
| title_short | Factors affecting crop insurance decision |
| title_sort | factors affecting crop insurance decision |
| topic | Economics and management |
| url | https://stud.epsilon.slu.se/7237/ https://stud.epsilon.slu.se/7237/ |