Willingness of Cocoa Farmers to Participate in Crop Insurance in the Dormaa Municipality of the Bono Region, Ghana
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Vol. 13(1), pp. 45-55, January-March 2021 DOI: 10.5897/JDAE2020.1212 Article Number: BE96C1765948 ISSN 2006-9774 Copyright ©2021 Journal of Development and Agricultural Author(s) retain the copyright of this article http://www.academicjournals.org/JDAE Economics Full Length Research Paper Willingness of cocoa farmers to participate in crop insurance in the Dormaa Municipality of the Bono region, Ghana Samuel Afotey Anang*, Tekuni Nakuja and Aristerchus Sarpong Department of Agricultural Economics, Agribusiness and Extension, University of Energy and Natural Resources, Sunyani, Ghana. Received 4 September, 2020; Accepted 23 December, 2020 The investigation considered farmers’ readiness to take part in crop insurance in the Dormaa municipality of the Bono Region, Ghana. Essential information from 167 respondents who were chosen through a multi-stage sampling method for the study was collected through a structured questionnaire. Elements influencing readiness to participate in crop protection by cocoa farmers was evaluated using probit regression model and lastly constraints of cocoa farmers were assessed utilizing Kendall’s coefficient of concordance. The study found that the average amount farmers were eager to pay was GH₵215.59 per year for crop insurance. Majority 96.7% of the respondents were eager to participate in crop insurance but 3.3% of the respondents were not willing to take part. The important factors influencing readiness to join crop insurance by the farmers were age, marital status, access to extension service and experience in cocoa farming. Again, the foremost constraint affecting the farmers was pests and diseases. The study therefore recommends that agricultural extension agents and other agricultural insurance stakeholders should sensitize crop farmers on the significance of crop insurance policy. Insurance companies ought to give crop insurance to farmers at moderate rates of GH¢ 215.59 per year to encourage their participation. Key words: Crop insurance, cocoa, probit regression, Dormaa Municipal assembly, Ghana. INTRODUCTION Agriculture is critical to the economy of each emerging 2017 to 19.7% in 2018. Crops are another major nation including Ghana since it utilizes around 66% of the engagement in Ghana with a portion of 14.5% of gross labour force in Ghana; both formal and casual. The domestic product (Ghana Statistical Service, 2019). agriculture subsector grew by 4.8% in 2018 contrasted Despite the fact that the contribution of farming to with a development pace of 6.1% in 2017. Agriculture’s Ghana's Gross domestic product has dropped over the portion of gross domestic product dropped from 21.1% in years, it continues to be a powerful force in the economy *Corresponding author. E-mail: [email protected]. Author(s) agree that this article remain permanently open access under the terms of the Creative Commons Attribution License 4.0 International License 46 J. Dev. Agric. Econ. (ISSER, 2011). A fundamental profitable area and a insurance affords the prospect for societies to substitute significant source of export income for Ghana over the risk with known rate. Individuals procure insurance past years have been cocoa. Briesinger et al. (2011) coverage hoping to receive a sum, anytime the showed the portion of cocoa in agrarian gross domestic policyholder encounters protection secured misfortune product surge from 13.7% in 2000 to 2004 to 18.9% in (Nimo et al., 2011). As indicated by Aidoo et al. (2014), a 2005/2006. The momentous role of cocoa to Ghana's large portion of the insurance agencies in Ghana offer income in addition to the reality it helps as a key numerous protection plans (for example accident wellspring of work for many Ghanaian farmers implies its coverage, life and medical coverage, fire protection and future against any unexpected conditions should be burglary) apart from crop insurance scheme. secured. This is on the grounds that any significant As indicated by Ray (2001), crop insurance can provide disaster in this sector will negatively affect both the a cushion for yield damages in an awful time and assist macroeconomic and the microeconomic areas of the guarantee a significant level of protection in farm returns economy. Despite the fact that danger in the agricultural in the long term. Agricultural protection considers how sector is inevitable, it can be managed. vulnerabilities can be dealt with efficiently to the benefit of Cocoa production differ markedly on yearly basis the farming households presently and later on. This can because of unpredicted climate conditions, pests and assist to safeguard agriculture and the bigger economy. disease invasions and sporadic economic situations Agricultural insurance is thus an indispensable aspect of triggering harvests and prices to sway widely. Cocoa the institutional arrangement crucial for the growth of food production ought to be given more consideration to production; generally a high-hazard endeavour. One of enlarge Ghana's income and in addition to assist with Ghana’s main national export produce is cocoa (Anang, settling the food security challenges in parts of the nation. 2011). At the national level, cocoa’s contribution to trade As per Oluyole and Sanusi (2009) prior investigations balance is in excess of over 20% of the total annual recognized some significant explanations behind export revenue. The cocoa sector in Ghana has been differences in cocoa output which include low harvest, pronounced as an African success story for the reason impulses of environment, extreme climate situations, that over the years, the country has continued its status infection occurrence, pest invasion, and regular dangers as one of the worlds’ foremost suppliers of the crop like heavy downpour, erosion and long dry seasons. High (Williams et al., 2015). risks and uncertainties related with agricultural production From 1911 to 1960, Ghana led in the supply of cocoa has been ascribed to the decline in production of cocoa beans, exporting about 40% of the total world output. (Aderinola and Abdulkadri, 2007). This is due to the fact Ghana went through two significant cataclysmic events that similar to other crops, cocoa needs extensive over the past three decades affecting agricultural uninterrupted and incessant interaction with the forces of activities (Nimoh et. al., 2011). These debacles were nature. These threats and vulnerabilities are unpredicted prolong dry season and flooding. These hostile situations and they are outside the capability of the farming prompted inescapable decimation of farmland and deaths households, subsequently, the farmers can just cope with in the pretentious zones (Agyemang, 2010). In 1983, them. Cocoa farmers incur huge losses on savings and there occurred a mass decimation of cocoa seedlings in income due to the losses suffered from these hazards the nation as a result of the cocoa swollen shoot and uncertainties. In the light of this, Ajakaiye and infections and shrubbery fire (Nimoh et. al., 2011). Cocoa Adeyeye (2001) discovered that smallholder-farming farmers lost almost all their funds. In situations like this households in many emerging nations of the world with crop insurance is the only option to mitigate such no exception to Ghana are ensnared in the rancorous problems that may arise from natural causes. Lately, pattern of insufficiency. This succession is portrayed by interest has increased in introducing weather-based crop low output and low returns from the farm, occasioning in insurance contracts to farmers as a means to help them practically no sparing funds, necessary for the revolution break out of their vicious cycle of poverty (Barrett et al., of their farming expedition, accordingly adding to the low 2008). position conferred on farmers within the populace. Insurance decreases the effect of yield destruction and Conversely, Quagrainie (2006) prescribed that insurance damages; offer farmers earnings and production could be utilized to abate financial expenses of numerous cushioning (ILO, 2011). Advantages of this nature give hostile events, for example, deaths, accidents, burglary impetus to crop insurance as an avenue that diminishes and weather damages. Insurance is defined as an the effect of output risk. Insurance assists farmers to agreement between two parties where one party called stabilize their income and savings and prevent the insurer agrees to an exchange called premium to pay devastating effects of losses due to natural vulnerabilities the other party a fixed measure of money in the event of or low market prices. Notwithstanding, if farmers are sudden incident (Adams 1995). As indicated by Sarris eager to partake in insurance and the amount they are (2002), insurance warrants a base cost for an explicit ready to pay just as the determinants of their readiness to amount over a determined duration for which the safety pay for a minimum price of insurance remain an open net provider pays a forthright premium. Nevertheless, inquiry. According to Okoffo et al. (2016), there is Anang et al. 47 diminutive evidence on cocoa farmers' eagerness to the 167 randomly selected respondents using structured protect their produce, premium prepared to pay and the questionnaires. readiness of protection agencies to deliver crop protection scheme to farming households. This has been Data analysis a challenge affecting the introduction of insurance schemes to cocoa farmers in cocoa farming communities. The data collected were analyzed utilizing the probit regression This situation is not different