Impacts of specialization and cognition on farmers’ demand for index insurance for the live hog price

ZHANG Yanyuan1 ZHAN Jintao1,2 CHEN Chao1,2

(1.College of Economics and Management, Nanjing Agricultural University)
(2.China Center for Food Security Studies, Nanjing Agricultural University)

【Abstract】Using survey data on Jiangsu Province and Henan Province in 2015, this paper investigated farmers’ demand for index insurance for the live hog price, and analyzed differences in the demand for index insurance for the live hog price of farmers with different degrees of specialization and cognition. The results showed that farmers had a high willingness to buy index insurance for the live hog price, and that the premium that they were willing to pay was higher than that regulated under the current insurance policy. It showed that the status of live hog production in household incomes had a positive impact on farmers’ willingness to buy and pay, while participation in cooperatives had a negative impact on their willingness to pay. The experience of purchasing traditional live hog insurance and cognition of live hog price risks had positive influences on farmers’ willingness to buy and willingness to pay, and farmers’ knowledge of index insurance for the live hog price had a positive impact on their willingness to pay. Furthermore, governments’ subsidies, the development of differentiated insurance products as well as promotion and education of insurance were found to be conducive to promoting the development of index insurance for the live hog price. Moreover, the study suggests that participation in agricultural cooperatives as an important alternative to cope with market risks may substitute for index insurance for the live hog price.

【Keywords】 index insurance for the live hog price; willingness to buy; willingness to pay; specialization; insurance cognition; risk cognition;

【DOI】

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(Translated by Wei Yang)

    Footnote

    [1]. ① Source: Tuo, G. (ed.) The Study of China’s Agricultural Insurance 2015. Beijing: China Agriculture Press, (2015). [^Back]

    [2]. ① Contract farming has high demands for farmers’ production methods and production standards, and a considerable number of farmers do not have the ability to match the standard. Contract farming develops very slowly in China, and among the 443 farmers surveyed in this paper, only 13 (2.93%) have signed contracts with companies. Therefore, this paper does not consider contract farming. [^Back]

    [3]. ① According to National Agricultural Cost-benefit Data Assembly, the classification standard of live hog breeding scale is as follows: 30 and below for free ranging; 30–100 (including) for the small scale; 100–1000 (including) for the medium scale; and more than 1000 for the large scale. [^Back]

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This Article

ISSN:1001-4454

CN: 44-1286/R

Vol 39, No. 06, Pages 1393-1398

June 2016

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Article Outline

Abstract

  • 1 Introduction
  • 2 Theoretical analysis and research hypothesis
  • 3 Data source, model setting and descriptive analysis on samples
  • 4 Estimated results and analysis
  • 5 Conclusions and policy implications
  • Footnote

    References