Preferences for crop insurance attributes among cocoa farmers in Ghana

Abstract

PurposeThis article analyzes farmers' preferences for different nonindexed crop insurance alternatives, using discrete choice experiment data on cocoa farmers from southern Ghana. We examine farmers' attendance to attributes by comparing self-reported attribute nonattendance (ANA) to the behavior inferred from the choices.Design/methodology/approachWe utilize the latent class endogenous attribute attendance (EAA) model to address potential endogeneity by jointly modelling farmers' attribute processing strategies with their choice of attributes of the insurance products.FindingsThe results show that premium levels, mode and length of indemnity payouts tend to influence farmers' preferences for crop insurance products. The findings also reveal 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 estimates for the crop insurance attributes.Research limitations/implicationsThe findings from the study suggest that credit constraints do not only limit input use, but also tend to have statistically significant impact on farmers' cocoa insurance participation decisions.Originality/valueThe study examines the impact of credit constraints on farmers' crop insurance preferences while accounting for ANA.