Abstract
Irregular and low rainfall levels and drought have become important sources of low agricultural yields and agricultural incomes in sub-Saharan Africa. Weather index insurance is a financial product for climate risk management aimed at securing farmers' incomes. This paper aims to evaluate the impact of a weather index insurance project piloted with groundnut farmers in Senegal in 2015-2016 agricultural season on farmer’s technical efficiency (TE). A Stochastic Production Frontier model was used to estimate the TE scores. A matched group of beneficiaries and control farmers was determined using propensity score matching techniques to mitigate biases stemming from observed variables. The results showed that average TE is consistently higher for control farmers than the beneficiary group. Age, gender and education were found to be significantly related to technical efficiency, while membership in farmers’ association, credit, improved seeds and extension contact were not significantly related to technical efficiency. From a policy perspective, we suggest that weather index insurance programs targeting smallholder farmers in developing countries, and particularly in sub-Saharan Africa, be accompanied with education services, provision of new technologies such as high yield seeds and other best farm management practices and credit to help farmers better adapt to weather shocks and secure their production and income.
Highlights
The agricultural commodities production are subjects to many risks which cause distortions on the farmer productivity and on their output
= +∑ represents the quantity of groundnut harvested in kilogram by the ith farmer; (1b) is the vector of production inputs; is a vector of parameters to be estimated; is two sided stochastic term that accounts for statistical noise and is assumed to be independently and identically distributed (0, ) ; uncorrelated with which is nonnegative random error accounting for technical inefficiency and is assumed to be independently distributed, truncated at zero with mean = +
Consistence with other studies on technical efficiency in agricultural sector in developing countries, the results show that land is the most important input for groundnut production in Senegal
Summary
The agricultural commodities production are subjects to many risks which cause distortions on the farmer productivity and on their output Many of these risks, include climates risks, biological risks, irregularity of rain and the invasion of insects, are out of farmer’s control. Non-Governmental Organizations (NGOs) and international institutions including World Bank and African development Banks, are implementing many projects and programs to help farmers to manage production risks in order to ensure sustainable agricultural growth and poverty alleviation. Many instruments such as micro-credit services, diffusion of new technologies including improved seeds and recently weather index insurance are used by NGOs and international institutions to achieve this main objective. Improving farm technical efficiency is an important element of agriculture based growth jsd.ccsenet.org
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