Agricultural insurance-agricultural productivity nexus: Evidence from international data

Abstract

This article examines the relationship between the development of the agricultural insurance market (using the penetration measure) and the agricultural productivity growth in the context of various factors potentially influencing such relationships. We employ a panel data static model for 23 countries in two continents during the 2000-2015 period. Our main finding is that the development of agricultural insurance market has a positive effect on agricultural productivity growth. Moreover, we show that the conditional variables of a high level of agricultural insurance market penetration, a high level of agriculture credit, a high level of farmers’ education, and a moderated level of agricultural risk management (a low level of expost compensation supplied by the governments in case of catastrophic risks) alleviate the positive impacts of the development of the agricultural insurance market on agricultural productivity growth. By contrast, the conditional variables of a low level of natural risks (drought, floods, and extreme temperatures) and a low level of yield risks strengthen the positive impacts of the development of the agricultural insurance market on agricultural productivity growth.