The Impact of Agricultural Insurance on Farmers’ Enthusiasm for Sugarcane Production: Evidence from Guangxi, China

Abstract

Improving farmers’ enthusiasm for sugarcane production is of significance for maintaining the stability of sugarcane cultivation, as well as ensuring the sustainability and security of the national sugar supply. Based on rural household survey data from five major sugarcane producing counties in the Guangxi Zhuang Autonomous Region in 2018, this paper analyzes the impact of agricultural insurance on farmers’ enthusiasm to grow sugarcane using Probit, IV-Probit, and 2SLS methods, examines the problem of heterogeneity due to differences in farmers’ degree of part-time occupation, and analyzes the mechanisms of agricultural insurance in affecting farmers’ enthusiasm for sugarcane production through income effect and substitution effect pathways. The findings of the study are as follows: first, participation in agricultural insurance significantly increases farmers’ enthusiasm for sugarcane production; second, the impact of agricultural insurance on farmers’ enthusiasm for sugarcane production is heterogeneous depending on the degree of part-time farming, and the intensity of the impact decreases as the degree of part-time farming increases; finally, agricultural insurance increases farmers’ enthusiasm for sugarcane production through income effects such as increased farm income and income expectations on the one hand, and positively influences farmers’ enthusiasm for sugarcane production through competitive crop substitution effects at both agricultural and non-farm levels on the other. Based on these findings, policy measures are proposed in this paper, including increasing the level of sugarcane insurance coverage, improving the pricing strategy of sugarcane, and accelerating the mechanization of the entire sugarcane production process.