Crop Insurance- A Conventional Approach to Adaptation

Abstract

This chapter evaluated the factors that affect the willingness to pay of the farmers by using the logit regression model with the farmers’ divergence in terms of various socio- economic conditions. Contingent valuation method (CVM) was conducted. The results of the study report that the majority of the rice farmers of the study area are medium-aged. As expected, 47% of the farmers have secondary school education which will enable them to adopt new methods of rice production. In this study, we also find that 36% of respondents reveal that their monthly earning is in the range of RM2000 to RM 4000. Their income is above Malaysia’s national poverty line income (PLI) of RM800 (10th Malaysian plan). The major risks faced by the farmers are rat attack, disease, excess rainfall, high temperatures, variation in yield, and flood. This study reports that most farmers think crop insurance scheme is designed especially for wealthy farmers because it costs high quality and is not available to the poor and marginal farmers. They also perceive that the procedure currently works for another insurance scheme is very complicated. This study finds that 76% of the farmers are willing to pay the crop insurance scheme. The rest of the farmers believe that the premium should be subsidized by the government and they do not believe in conventional insurance.