Agricultural production risks, coping mechanisms and potential for crop insurance in Tanzania
Loading...
Date
2013
Authors
Journal Title
Journal ISSN
Volume Title
Publisher
2013 Time Journals
Abstract
Pessimism surrounding feasibility and viability of crop insurance schemes especially to developing country
economies has since been a global phenomenon. However, pragmatic evidence is turning the clock around as
more such schemes are now being launched. There have been very few studies on the subject in Tanzania
which have not translated into a tangible full-fledged scheme to date. New evidence is unfolding now as shown
in this study that its potential is substantive if the existing gaps in terms of information imperfection and
asymmetry in respect to its marketability and viability, especially on insurers‟ side, are filled. Crop insurance
potential was confirmed in the study involving 116 bean farmers in Arumeru district during the 2003/04 season.
Both objective and subjective conditions for its need were fulfilled according to the study results. In the first
case, about 76% of the farmers preferred crop insurance to other mitigation strategies against natural hazard
risks. Pests and disease surfaced as the most debilitating risks to the farmers followed by drought. However,
Pests and plant diseases are farm management problems which are not insurable. In the second case,
profitability levels differ between individual farmers and locations across the three study villages from both rain-
fed and irrigated areas. Both profit and loss making farmers were available from any of the villages. As a proxy
for farmers‟ ability to meet insurance costs, profitability results suggested that not all bean farmers were capable
of meeting the involved costs. Binary logistical regression analysis results, rather unexpectedly, indicated that
the only significant factor influencing preference for crop insurance in the study area was asset index (a proxy
for farmer‟ wealth). All 8 interviewed insurers (both public and private) were not ready to mount crop insurance
schemes in the country claiming financial infeasibility of the scheme, lack of adequate market information and
lack of requisite expertise. The study recommended the need to mount a crop insurance pilot program which
would be initially funded by the Government, of specific peril and voluntary. This should go in tandem with
introduction of insurance training in agricultural schools and colleges to increase its awareness to the target
populace. Related studies hereafter have also confirmed crop insurance potential in tea and coffee and this
paper has taken stock of the results.
Description
Time Journals of Agriculture and Veterinary Sciences
Vol. 1(1) pp.11-22 July 2013
Keywords
Agricultural Production Risks, Natural Hazards, Coping Mechanisms, Crop insurance