Livestock Insurance Research Articles

Assessing the Effectiveness of a Community-based Livestock Insurance Program.

Financial mechanisms to mitigate the costs of negative human-carnivore interactions are frequently promoted to support human coexistence with carnivores. Yet, evidence to support their performance in different settings is scarce. We evaluated a community-based livestock insurance program implemented as part of a broader snow leopard conservation effort in the Tost Tosonbumba Nature Reserve, South Gobi, Mongolia. We assessed program efficiency and effectiveness for snow leopard conservation using a results-based evaluation approach. Data sources included program records from 2009 to 2018, as well as surveys conducted in 2016 and 2017, which allowed us to compare key indicators across communities that participated in the insurance program and control communities. Program coverage and number of livestock insured rapidly increased over the years to reach 65% of households and close to 11,000 livestock. Participants expressed satisfaction with the program and their contributions increased over time, with an increasing proportion (reaching 64% in 2018) originating from participant premiums, suggesting strong community ownership of the program. Participants were less likely to report the intention to kill a snow leopard and reported fewer livestock losses than respondents from control communities, suggesting increased engagement in conservation efforts. These results together suggest that the insurance program achieved its expected objectives, although it is challenging to disentangle the contributions of each individual conservation intervention implemented in intervention communities. However, in the first three years of the program, snow leopard mortalities continued to be reported suggesting that additional interventions were needed to reach impact in terms of reducing retaliatory killings of large carnivores.

Indigenous knowledge about climate change and sustainability of nomadic livelihoods: understanding adaptability coping strategies

Indigenous knowledge about climate change that makes adaptability necessary by coping strategies leads to the sustainability of nomadic livelihoods. This paper proposed a new adaptability approach, an association coping strategy (ACS), which is established based on the association rulesʼ recommendations. The adaptability was empirically analyzed using 12 coping strategies used by Kashkooli nomads in Sepidan plain, Fars province, Iran. Required data were gathered both in the form of time series from November 1988 to February 2020 and cross section during June–July 2019. Household perceptions of climatic and environmental variables, supported by meteorological data, revealed that climate change was negatively impacting the Kashkooli nomadic livelihood in Sepidan plain. The findings also indicated that taking simultaneous coping strategies resulted in selling livestock surplus, saving water consumption, livestock insurance, rangeland regeneration schemes, and immigration to more suitable rangelands. Therefore, Kashkooli nomadic livelihood survived climate changes using ACSs. The association rules were useful for recommending anticipatory coping strategies that were adopted based on indigenous knowledge about climate change by nomads to establish appropriate adaptability.

The Welfare Effects of Index-Based Livestock Insurance: Livestock Herding on Communal Lands

Agricultural (index) insurance for smallholders in developing countries has gained traction in academic and policy circles. The expectation is that the uptake of insurance will protect smallholders from production shocks and incentivize them to modernize production. We develop a simple theoretical model to demonstrate that the welfare effects of insurance are fundamentally ambiguous—even in the absence of transaction costs or basis risk. The second-best nature of the institutional context within which smallholders operate implies that the uptake of insurance may accentuate pre-existing inefficiencies. This idea is worked out in detail for the case of livestock herding on common grazing lands. Our theoretical model predicts that insurance invites overstocking of communal lands, and lowers the profitability of herding when common pastures are degraded.

Adaptation strategies of nomadic herders in northeast Mongolia: climate, globalisation and traditional knowledge

ABSTRACT Herders in Mongolia have adapted to changing environmental conditions over thousands of years through innovations in pasture and herd management practices, knowledge, collective institutions and mobility strategies, yet they now face unprecedented climate risks threatening their livelihoods, economies and ways of life. This paper presents the results of a study into how herder communities adapt to climate change and the potential role an ecosystem services approach could play in informing the development of effective adaptation strategies. The findings are based on semi-structured interviews with herders, key informants, focus group discussions and a survey of nomadic households in Northeast Mongolia. The benefits of pasture ecosystem services have changed considerably due to climatic and socio-economic changes in the Mongolian steppe resulting in degradation of the pastureland and water resources. The ways that traditional ecological knowledge and practices can support adaptation to climate change are explored. In particular, the seasonal movement of nomads represents a valuable form of knowledge and practice of adaptation in response to the changes in temperate dryland ecosystems. To continue to maintain mobility as part of adaptation strategies other adaptation actions are required, such as the implementation of an appropriate livestock insurance systems that addresses climate and weather risks, and restoration of dryland ecosystem services, notably through reforestation and improvement of water supplies. Further changes in the pastureland ecosystems may lead to further adaptations in nomadic livelihoods, leveraging nomadic herders’ knowledge of local ecosystem services.

Conservation, risk aversion, and livestock insurance: The case of the snow leopard

AbstractLivestock insurance consists of livestock owners pooling resources together in order to hedge against the risk of attacks by predators on their individual herds. We use an economic model to study optimal livestock insurance and to discuss its viability in improving outcomes for livestock owners. The benefit from insurance depends on the livestock owners' level of risk aversion. We calibrate the model using data from Project Snow Leopard and investigate the potential of livestock insurance for achieving conservation goals. The model predicts that leopard killings would decline under the proposed livestock insurance contract. The level of the decline depends on the degree of risk aversion. Our analysis calls for surveys that measure risk aversion of local livestock owners to be conducted in any situation where insurance is considered as a policy towards achieving conservation goals. Finally, we discuss how the proposed livestock insurance scheme could be implemented in practice.

Farmers’ perception on status of livestock insurance in Surkhet district, Nepal

Livestock is an important sector for sustained livelihoods of Nepalese people, particularly for small holder farmers. However, occurrence of any disease or disaster may get livestock as the source of sufferings. Livestock insurance can come up as an effective tool for risk management in livestock sector. This study covers the current status and perception of the farmers on livestock insurance. A total of 45 livestock farmers were selected purposively from three municipalities (15 from each municipality) in Surkhet district as Birendranagar Municipality (Birendranagar, Saldada), Bheriganga Municipality (Maintada) and Lekbeshi Municipality (Lekfarsa, Dasarathpur and Satakhani). Data was collected by face-to-face interview with farmers (45), focus group discussions (2) and key informant survey (4). Mortality, high cost of animal, production loss and price risk were the major risks encountered in the farm. Utilization of their saving and loan reimbursement was preferred by the farmers for capital management. Adoption of insurance among livestock owners was found motivated mainly by cooperatives, friends and family. Among twenty insurance companies offering insurance policies in Surkhet district, Everest Insurance Company Limited was popular. Only few farmers were found having complete awareness on livestock insurance. Majority of farmers agreed on insurance as an effective tool for risk management whereas only 64.44% of total respondent farmers were insuring their livestock, out of which 37.93 % had renewed their insurance package. Goats were mostly insured. This study indicates that better coverage, further process simplification, and perspicuity of livestock insurance scheme including awareness raising are essential for livestock insurance to approach higher level of insurance adopters.

Determinants of livestock insurance adoption in Nepal

Livestock insurance, an important risk management tool, is becoming popular in Nepal after Crop and Livestock Insurance Directives, 2013, came into action. To widen the adaptability of the insuranc...

Willingness to pay on cattle business insurance in supporting UPSUS SIWAB in Bangka Belitung Province

Apart from productivity problems, the implementation of beef cattle business is faced with various risks. Several risks faced by smallholder beef cattle business, such as; price, disease, feed, marketing, theft, and relationship with traders. In order to maintain the sustainability of the livestock business, breeders need a guarantee in order to continue their business. This guarantee can be in the form of livestock insurance. Cattle insurance is one of the important programs to support the livestock sector, given the important role of cattle insurance not only for breeders but for various parties. This study aims to obtain information about the willingness to pay (WTP) on cattle business insurance in Bangka Belitung Province. This research was conducted from June to October 2018 in Bangka Belitung Province. Data collection was carried out by interviewing 150 farmers as respondents as primary data. In order to strengthen this, secondary data was collected from the agricultural agency at the provincial level. The WTP value obtained shows that it is still below the value of the premium paid at this time, this indicates that farmers still want subsidies from the government for the implementation of AUTS to minimize the risk of livestock business.

What Factors Predispose Households in Trans-Himalaya (Central Nepal) to Livestock Predation by Snow Leopards?

Simple SummaryConflict between snow leopards and humans across the trans-Himalaya is a pressing conservation concern. Conflict severely impacts the socio-economy of the local pastoralist community and threatens snow leopard survival. We investigated the socio-economic factors influencing such conflict and pastoralist attitudes towards snow leopard conservation using semi-structured interviews for a better understanding of what factors influence the variability in losses among the households in the Narphu valley, Nepal. While snow leopards caused significant losses to impoverished pastoralist households, respondents were generally accepting of their presence due to religious reasons and strict law enforcement. We observed poor herding and guarding practices with households owning larger numbers of total livestock (especially large bodied animals like yak (Bos mutus f. grunniens) and cattle (B. primigenius f. taurus)), which resulted in the higher loss. Further, compensation and insurance schemes were dysfunctional, with few households insuring their livestock and receiving compensation for depredated livestock over the past two years. We recommend improving herding practices and the implementation of compensation and insurance schemes to lower the economic loss faced by herders due to predation and creating positive avenues for the co-existence of snow leopards and humans.Livestock depredation across the trans-Himalaya causes significant economic losses to pastoralist communities. Quantification of livestock predation and the assessment of variables associated with depredation are crucial for designing effective long-term mitigation measures. We investigated the patterns and factors of livestock depredation by snow leopards (Panthera uncia) using semi-structured questionnaires targeting herders in the Narphu valley of the Annapurna Conservation Area, Nepal. During the two years (2017/18 and 2018/19), 73.9% of the households interviewed (n = 65) lost livestock to snow leopards, with an annual average loss of two livestock per household. Of the total depredation attributed to snow leopards, 55.4% were yak (mainly female: 79%), 31.7% goat, 6.8% sheep, 3.2% horse and 2.8% cattle. Results from applying Generalized Linear Mixed Models (GLMMs) revealed the total number of livestock owned and the number of larger bodied livestock species as the main explanatory covariates explaining livestock depredation. Forty-one (41%) of all herders considered snow leopard’s preference for domestic livestock as the main factor in livestock predation, whereas only 5% perceived poor herding practice as the main reason for the loss. Our study found poor and changing herding practices in the valley, whereby 71% herders reported careful herding as a solution to snow leopard depredation, and 15% of herders considered the complete extermination of snow leopards as the best solution to the problem. Tolerance levels and awareness among herders towards snow leopard conservation is increasing, mainly due to the Buddhist religion and strict law enforcement within this protected area. We recommend the effective implementation of a community-based livestock insurance scheme to compensate the economic loss of herders due to predation and improved herding practices as the recommended mitigation measures for ensuring livestock security and snow leopards’ conservation in the valley.

Determinants of Livestock Insurance Demand: Experimental Evidence from Chinese Herders

AbstractWe provide the first evidence about insurance preferences among herders in pastoral regions in China. We estimate herders’ preferences for alternative insurance configurations based on a hypothetical and a consequential choice experiment, aiming to minimise hypothetical bias. Our results show that herders prefer the insurance plan in general with demand for livestock insurance increasing when insurance premiums decrease or payouts increase. The hypothetical bias only influences the willingness‐to‐pay estimates through the cost attribute, while the marginal rates of substitution of non‐cost attributes remain largely unchanged. The hypothetical treatment nearly doubles the magnitudes of willingness‐to‐pay estimates for some insurance attributes.

Managing Price Risk of Pork through Gross Margin: A Depiction from China and US

China’s demand for pork has been increasing at a relatively constant rate and its pork imports are increasingly determined by the fluctuations of its domestic supply. This fluctuation in domestic supply has resulted in making farmers suffer from the shocks of price instability. Despite the absence or underdevelopment of livestock insurance in most developing countries, an experience from China and US serves as a lesson for these countries to pay attention to the subsector with potential contribution to the country’s economy but having little or no efforts accorded to the same. This study explored the importance of Livestock Gross Margin (LGM) insurance by analyzing the pork price fluctuation trend in China and linking the risk to the impacts on revenues of pork producers. The sources of data were national surveys reports, research papers and data obtained from China’s Ministry of Agriculture (MoA). Findings revealed that Pork producers in China had been faced with adverse price fluctuations that posed threats to producers’ revenues. The study shows LGM insurance as an important and alternative tool to smooth incomes of the producers in the pork industry when it is managed in its advanced stage. For pork industry to continue prospering, the study recommends establishment of reliable futures market to provide partial income risk insurance to producers whose output is risky.

Assessment of a Spatially and Temporally Consistent MODIS Derived NDVI Product for Application in Index-Based Drought Insurance

In arid and semi-arid regions of Eastern and Southern Africa, drought can be devastating to pastoralists who depend on healthy vegetation for their herds. The Kenya Livestock Insurance Program (KLIP) addresses this challenge through its insurance program that relies on a vegetation index product derived from eMODIS NDVI (enhanced Normalized Difference Vegetation Index). Insurance payouts are triggered when index values fall below a certain threshold for a Unit Area of Insurance (UAI). The objective of this study is to produce an updated, cloud-based NDVI product, potentially allowing for earlier payouts that may help herders to prevent, minimize, or offset drought-induced losses. The new product, named reNDVI (rapid enhanced NDVI), provides an updated cloud filtering algorithm and brings the entire processing chain to the cloud. Access to the scripts used for the processing described and resulting data is openly available. To test the performance of the new product, we provide a robust evaluation of reNDVI and eMODIS NDVI and their derived payout indices against historical drought, payouts provided, and mortality data. The implications of potential payout differences are also discussed. The products show good comparability; the monthly average NDVI per UAI has correlation values over 0.95 and MAPD under 5% for most UAIs. However, there are moderate differences when assessing year-to-year payout amounts triggered. Because the payouts are currently calculated based on the 20th and first percentile of index values from 2003–2016, payouts are very sensitive to even small changes in NDVI. Where livestock mortality was available, payouts for reNDVI and eMODIS had similar correlations (r = 0.453 and r = 0.478, respectively) with mortality rates. Therefore, with the potential reduced latency and updated cloud filtering, the reNDVI product could be a suitable replacement for eMODIS in the Kenya Livestock Insurance Program. The updated reNDVI product shows promise as a vegetation index that could address a pressing drought insurance challenge.

Understanding pastoralists’ dynamic insurance uptake decisions: Evidence from four-year panel data in Ethiopia

Despite the demonstrated benefits of index insurance, its adoption rate remains low in many developing countries. While a growing literature explores the factors associated with insurance uptake, we still know little about its dynamic patterns. Using a unique data set covering four years and six semi-annual sales periods of an index-based livestock insurance (IBLI) product in southern Ethiopia, we examine the dynamics of pastoralists’ demand for IBLI. We find that reduced insurance premiums induce households to purchase IBLI. While a one-shot subsidy can create a price reference point that may reduce the subsequent uptake, we do not find such price-anchoring effects. We also find that overall uptake decision is positively correlated intertemporally, although there is no strong evidence for learning by doing or learning from others. Finally, we show that pastoralists are more likely to purchase IBLI when drought risk is high, consistent with the existence of spatiotemporal adverse selection. We discuss the potential of distributing discount coupons to trigger initial uptake and adjusting premium rates dynamically to avoid spatiotemporal adverse selection as effective policy tools toward sustainable livestock insurance. Overall, our study signifies the importance of an empirical analysis that considers the dynamic demand structure.

Influence of Mastitis and Repeat Breeding Incidence on Participation in the Animal Insurance Program for Dairy Farmers in Ba Vi, Hanoi, Vietnam

The livestock insurance program for dairy farmers in Vietnam targeting various acute diseases began in 2011 as a pilot project; however, due to vaccination campaigns, outbreaks of such diseases are rare. The objective of this study was to investigate the effects of mastitis and reproductive failure-which chronically affect the farming economy-on the decision to participate in the insurance program. A survey involving a questionnaire and milk sampling from apparently healthy animals was conducted on the 38 participating and 59 non-participating dairy farms in the livestock insurance program in Ba Vi, Hanoi, Vietnam, in August 2014. Microbiological tests were performed to detect sub-clinical mastitis, whereas the questionnaire was administered to collect information regarding farm management and the occurrence of clinical mastitis and reproductive failure over the previous three months. There were no significant differences in the proportion of farms having cows with clinical mastitis (insured: 8/38 farms, 21.1% vs. non-insured: 13/58 farms, NA = 1, 22.8%, p = 1) and repeat breeders (insured: 16/36 farms, NA = 2, 44.4% vs. non-insured: 20/57 farms, NA = 2, 35.1%, p = 0.49) over the previous three months. The proportion of farms having cows with sub-clinical mastitis at the time of the survey was also not significantly different between insured (5/38 farms, 13.2%) and non-insured (7/59 farms, 11.91%) farms (p = 1). Based on the obtained results, neither endemic disease nor farm management is respectably involved in the decision of farms to participate in the animal insurance program targeting acute animal infectious diseases.

Evolución de la gestión del riesgo en el sector agrario español: De la economía preindustrial a los seguros

From a long-term perspective (Early Modern Age until the Spanish Civil War), we analyse how the rural world confronted contingent risks that could cause serious material losses. For the fifteenth to eighteenth centuries, our research relied on notarial sources based on leases. For the nineteenth and twentieth centuries, we used a variety of sources, such as company statutes and balance sheets, trade journals, the Gaceta de Madrid and official insurance statistics. The analysis shows how typical Modern Age practices continued into the twentieth century. The Late Modern period was characterised by difficulty in introducing agricultural insurance, a low level of participation by private insurance companies and recourse to local and provincial mutual societies. The disinterest of the general insurance companies in covering agricultural risk was reflected in the insignificant weight of the corresponding premiums in the overall company figures, with the modest exception of livestock insurance. Mutualism, especially in northern Spain, sought support from public institutions such as provincial councils. Finally, in the first decades of the twentieth century, major agricultural employers exerted pressure on the State to progressively assume responsibility for agricultural coverage.

Farmers’ Willingness to Pay for Index-Based Livestock Insurance in the North West of South Africa

Rural livelihoods in most developing countries are threatened by climate-related risks such as drought, flood, heat waves, storms, and so on. Although farmers have adopted several adaptation strategies, they have proven less effective than hoped. Hence, index-based livestock insurance, an innovation that significantly assists farmers to acclimatise to climate-related risks, has been proposed; and its adaptability has attracted a notable increase in other African countries. However, the success of its adoption is dependent on the inclination of the farmers to pay for the service. Accordingly, this study investigates their willingness to pay for index-based livestock insurance and its determinants, and the factors influencing the total livestock units to be insured in the North West province of South Africa. Cross-sectional data were obtained from 277 cattle farmers, drawn randomly from the study area. The contingent valuation method was applied to determine the farmers’ willingness to pay; and only 10.8% were willing to pay. Simultaneously, the Heckit sample selection model was used to analyse the data to identify the factors responsible for farmers’ willingness to pay and total livestock units to insure. The findings revealed that farmer’s experience, age, education, marital status, awareness of insurance and household dependents were statistically significant, and influenced the maximum price R600 ($42, max willingness to pay, WTP) of those who accepted index-based livestock insurance. However, by implication, the study concluded that to adopt index-based livestock insurance in the study area among the livestock farmers, there should be policies to cater for the aforementioned factors.

Can Insurance Payouts Prevent a Poverty Trap? Evidence from Randomised Experiments in Northern Kenya

Index-based insurance can have welfare-enhancing effects through two pathways: by inducing policyholders to change their investment and risk-management decisions or by mitigating weather-related shocks through payouts. Most studies fail to distinguish between these two; thus, we know little about which effects dominate and their long-term welfare implications. This study uses a random distribution of discount coupons and drought events that trigger payouts as exogenous variations in order to identify both the ex ante risk-management and ex post payout effects of index-based livestock insurance in a pastoral-dominant society of northern Kenya, where the literature has detected asset-based poverty traps, represented by bifurcated herd-size dynamics. We find that, first, both risk-management and payout effects help reduce the probability of distress sales of livestock. Second, payout effects also reduce the slaughter of livestock. Finally, while payout effects remain robust for the sub-sample of poorer households below the poverty-trap threshold, statistically significant risk-management effects on reduced livestock sales disappear for them. Overall, our results suggest that insurance payouts can help the poor escape poverty traps, while the impact of behavioural changes accompanied by insurance purchases is more subtle in our settings.

Constraints Faced by the Dairy Farmers and Agencies Involved in Livestock Insurance in Haryana, India

Livestock insurance scheme has been formulated with the twin objectives of providing protection mechanism to the small, marginal and landless farmers against any eventual loss of their animals due to accident or natural death and to attain qualitative improvement in livestock and their products. Despite this, farmers and agencies faced various constraints in involved livestock insurance. From the analysis, it can be concluded that farmers opted for livestock insurance considered major constraints as animals not insured at actual market price and lengthy procedures in completing the formalities to file the claim. The insurance companies considered lack of information about willing farmers and untimely submission of documents for claims as the most important constraint in doing the insurance.

Inostrana iskustva u osiguranju poljoprivrede

The aim of this paper is to present characteristics of agricultural insurance at the global level. Agricultural insurance is most often seen, in a narrower sense, as crop insurance and livestock insurance. This type of economic protection has been applied since the 18th century, and today it is considered a part of a comprehensive risk management strategy in agricultural production. The most significant differences in agricultural insurance, at the global level, are the risks that can be insured in certain countries, as well as whether, or to what extent, agricultural insurance premiums are subsidized by the state. Agricultural insurance in most countries is voluntary, somewhere it is a condition for exercising the right to agricultural subsidies, and it is mandatory only in Greece and Cyprus.

Investing Sustainably in African Livestock Development: Opportunities and Trade-Offs

The production and consumption of animal source foods is central to the ongoing discussion of global food systems. The objectives of this report are first to describe the patterns and changing structures of the Sub-Saharan Africa (SSA) livestock sector and secondly to explore innovations that can help to address the complex trade-offs involved in investing in the development of a sustainable livestock sector. The report reviews trends in consumption, production and trade of major livestock commodities and feed in the four subregions of SSA and presents an overview of key issues facing the sector. A scenario for the SSA livestock sector in 2030 is developed using the IMPACT model. It shows significant growth of production across all major livestock commodities with poultry and pork growing faster than ruminant meat production. A series of technical and institutional innovations show opportunities to address the challenges of sustainably intensifying livestock production in SSA. They include improved forages, improved fodder conservation, artificial insemination combined with estrus synchronization, intensive beekeeping, livestock masterplans, livestock asset transfer programs, indexbased livestock insurance and livestock market information systems. The report concludes that livestock plays multiple key roles in the food systems in SSA and will continue to do so in the coming years. The complexity of the system and the multiple trade-offs imply a need for policy makers to shift from frequent “benign neglect” to actively invest in the analytical capacity to understand the changing roles and issues in SSA livestock development. In spite of important divergences on the future role, opportunities and risks associated with livestock production and consumption, developed economies and SSA nations will benefit from international scientific cooperation to jointly tackle the complex issues facing livestock production as part of the envisaged global food system.