Risk perception and agricultural insurance development strategy for cashew crop farmers in the Brong-Ahafo Region of Ghana

Thumbnail Image
July 2016
Journal Title
Journal ISSN
Volume Title
Although cashew development is imperative to mitigating the effect of climate change in 2030 and beyond when cocoa revenue begins to fall in Ghana, Cashew farmers lack access to credit to expand their production. The study was aimed at assessing risk perception of cashew farmers, financial institutions and insurers in order to develop agricultural insurance to enhance cashew crop farmers’ access to credit to foster cashew development. The study covered seven districts and 21 comunities in the Brong Ahafo Region of Ghana. Both quantitative and qualitative techniques were utilized in the study. A a multistage sampling technique was used to select a total of 500 respondents comprising 420 farmers, 30 pool stakeholders from Ghana Agricultural Insurance Pool (GAIP) and 50 credit officers from financial institutions.Primary data were collected by means of focus group discussions, semi-structured questionnaires, in-depth interviews, and choice experiments based on stated preference techniques. Means scores, percentages, frequencies, standard deviations, factor analysis, and Kendall’s coefficient of concordance, mix logit, latent class and multinomial logit models were employed in analysing the data. The results indicated that farmers’ residual risks and key perils which needed insurance covers were excess rainfall, high temperature, high wind speed and fire. It was found that farmers and financial institutions were willing to pay for agricultural insurance schemes based on index, indemnity and functional synthesis philosophies and GAIP stakeholders were willing to accept. The mix logit model and latent class models results show that the mean willingness to pay for functional synthesis approach was highest, followed by simulation, indemnity, index and benchmarking with mean WTP per acre of GH¢102.38, GH¢93.94, GH¢76.34, GH¢71.34 and ¢67.70, respectively and four latent classes were observed. Feasible distribution channels, insurance companies, banks, marketing champions, while full service model, banccassurance model, partner-agent and agency models were detected as supply models.Cashew crop farmers’ perception of insurance companies was positive with an index of 0.22, while a negative perception index of -0.15 was recorded for insurance benefit. Almost all farmers indicated that promotion of agricultural insurance education should be done through local radio and television stations. A value chain financing model in a public-private partnership (PPP) model was seen as an appropriate framework to lend and distribute insurance products to cashew farmers. To overcome the constraints to the development of agricultural insurance to enhance farmers’ access to credit for cashew development, a policy aimed at forming cashew development, building capacity for insurers, and legislation on agricultural insurance and value chain financing in Ghana will be useful.
A thesis submitted to the Department of Agricultural Economics, Agribusiness, and Extension, Faculty of Agriculture, College of Agriculture and Natural Resources Kwame Nkrumah University of Science and Technology in partial fulfillment of the requirements for the degree of Doctor of Philosophy (Ph.D.) in Agribusiness Management,