Analysing the Links Between Index-Based Crop Insurance Adoption and Agricultural Investments in Burundi

Abstract

This paper analyses the links between index-based crop insurance (IBI) adoption and agricultural investments based on a cross-sectional sample of 40 crop insurance adopters and 40 non-adopters from two communes located in Gitega province in Burundi. Analysed agricultural investments variables included use of fertilizers, applying crop diversification, and use of land and crop management practices in the most recent year and in the year before IBI implementation started. The results from multivariate analysis indicate that adopters use 36% more chemical fertilizers and invest 18% more in chemical fertilizers than non-adopters (p≤0.01). Adopters apply more land management practices also, in which they invest 15% more than non-adopters (p≤0.01). Furthermore, adopters change crop management practices over time by 38% and their knowledge in crop management practices increased by 23% (p≤0.01). Differences between adopters and non-adopters are however not statistically significant for crop diversification strategies and for the use of organic fertilizers. Hence, in order to be more effective and beneficial to farmers, other actions are also needed to encourage farmers to invest in their farm. Particularly promising in Burundi in this respect is to empower and train farmers by means of the Integrated Farm Planning approach, as well as to enhance farm inputs availability and to promote smart agri-entrepreneurial programs. In order to enhance agricultural development, the Burundi government should have a more prominent role in fostering farmers’ agricultural investments and in supporting IBI adoption.