Credit-Constraints and Preferences for Crop Insurance in Ghana: Implications of Attribute Non-Attendance in Discrete Choice Experiments

Abstract

, preferences for crop insurance programs are closely linked to credit market imperfections. Understanding the credit constraints of small holder farmers and their attribute non-attendance in the preferences for crop insurance products provide better assessments of policy-relevant instruments needed to ensure participation in crop insurance policies and reduction of agricultural production risks in sub-Saharan Africa. We analyze farmers preferences for different non-indexed crop insurance alternatives using Discrete Choice Experiment (DCE) data on cocoa farmers from southern Ghana, whilst recognizing the endogeneity of attribute non-attendance (ANA) of the respondents in the choice tasks, and the impact of liquidity constraints on farmers choice for the crop insurance products in the ANA framework. The results indicate that credit-constrained farmers attend more to premium and payment mode attributes of the crop insurance products, and that credit-constrained farmers tend to exhibit lower willingness to pay (WTP) estimates for the crop insurance attributes. We provide fruitful policy recommendations in the paper. Acknowledgement : The author thanks the Alexander von Humboldt Foundation for financial support for the study.