Factors influencing adoption of agricultural insurance as a climate change adaptation strategy by cattle producers in the cattle corridor of Uganda

Abstract

Enrollment by farmers for agricultural insurance in cattle corridor is still very low despite the potential of agricultural insurance as a climate change adaptation strategy. This study aimed at enhancing resilience of farmers in the cattle corridor to climate change through determining the knowledge, perceptions and attitudes of farmers in the cattle corridor about agricultural insurance and determining the factors influencing adoption of agricultural insurance by cattle producers. Primary data was collected using structured questionnaires that were administered to 75 purposively selected farmers within the cattle corridor. Key Informant Interviews (KIIs) were used to obtain information from agricultural insurance company agents and the representatives of Agriculture Insurance Consortium (AIC). Data analysis using descriptive statistics, cross- tabulations, means and t-tests revealed that more farmers (96%) had knowledge about general insurance and what it does compared to 64% who had knowledge about agricultural insurance. Information about agricultural insurance was sourced mainly by insurance agents (50%), followed by friends (35%) and least by banks (4%). Regarding agricultural insurance, there were more non-adopters (85.3%) than adopters (14.7%) of which most adopters (91.7%) had insured their crops compared to 8.3% who had insured livestock. Non-adopters had positive attitudes about the potential of agricultural insurance and many (75%) were willing to enroll and insure mostly their cattle (42.3%) against diseases (75.8%) and drought (63.6%). However, previous experiences with agricultural insurance and other forms of insurance had resulted into negative perceptions by adopters and non-adopters respectively. Results from the study indicated that agricultural insurance can be economically beneficial to cattle producers by providing them with compensation which exceeds the premium amounts paid. However, the major factors influencing adoption were limited knowledge about agricultural insurance (49.5%), farmers’ speculation of high cost of premium (20.5%), negative perceptions of farmers about service delivery by agricultural insurance companies and unfavourable agricultural policy designs. This study therefore recommends increased sensitization as a way of improving effectiveness of agricultural insurance. In order to increase knowledge of agricultural insurance among farmers, there is need for information dissemination through reliable platforms that can be trusted by farmers. Improving service delivery by agricultural insurance companies and modification of insurance xi policies to fit the priorities of cattle producers could also enhance uptake of agriculture insurance.