Livestock Farmers’ Willingness To Pay For Cattle Insurance In The Northern Region Of Ghana

ABSTRACT

Livestock production is very crucial to improving the livelihoods of smallholder livestock farmers in Ghana. However, these farmers are faced with risks associated with livestock production which affect their income and stability in the livestock business. Most of these risks they face are due to natural factors. It is, therefore, necessary to provide insurance for the farmers. This paper examines livestock farmers’ willingness to pay for cattle insurance in the Northern region of Ghana. The research was achieved by identifying the risk mitigating strategies that are used by the cattle farmers, willingness to pay amount and factors influencing their decision to adopt the insurance and the amount they are willing to pay. Using the multistage sampling technique, 227 farmers were sampled from the Northern region of Ghana for the study. The Kendall’s coefficient of concordance was used to identify and rank the risk mitigating strategies used by the cattle farmers. The contingent valuation method was adopted in eliciting willingness to pay amount of cattle farmers. The double hurdle model was used to analyze the factors influencing farmers’ willingness to pay and willingness to pay amount for the insurance. The study revealed that mixed farming is the most used risk mitigating strategy in the Northern Region of Ghana. The contingent valuation method revealed that the maximum amount cattle farmers are willing to pay is GH¢345.69. The minimum amount is GH¢ 57.61 and average amount cattle farmers are willing to pay per cattle in a year is GH¢115.23. The double hurdle results showed that level of experience, engagement in crop production, awareness of livestock insurance positively influenced farmers’ willingness to adopt cattle insurance and age of the farmer, access to credit negatively influenced cattle farmers’ decision to insure. Also, level of experience and awareness of livestock positively influenced the WTP amount of cattle farmers. Age of the farmer negatively influenced willingness to pay amount of cattle farmers. Farmers should adopt best production practices to lessen the impact of risk associated with cattle production. Cattle farmers should be effectively educated about livestock insurance. Affordable premiums and demand-oriented insurance products should be provided to the farmers to enhance their willingness to pay.