Determinants of farmers’ willingness to pay for crop insurance in Ankober Woreda, North Shewa Zone, Amhara Region, Ethiopia

Abstract

This study examines the Determinants of Farmers’ Willingness to Pay for Crop Insurance in Ankober Woreda, North Shewa Zone, Amhara Region, Ethiopia. The study used cross-sectional data from 245 randomly selected farm households from seven Ankober kebeles. It used binary Logit model to identify the main determinants of farmers’ willingness for crop insurance. The result showed that the maximum mean willingness to pay (WTP) for crop insurance in the study area is 272.5ETB (6.054$)/season / 0.25hectar and their WTP ranges from 0 ETB to 3000 ETB/ha/per season. From empirical findings, 15 explanatory variables are used in logit regression model; nine variables have shown key determinants for farmer’s willingness to pay for crop insurance in the study area. Accordingly, age of farmer’s, farmer’s education level, TLU, Credit access, income from crop production, saving habit, Awareness for Crop Insurance and Information access are statistically significant variables that determines farmers’ willingness to pay crop insurance in the study area at 1% and 5% significant level. Thus, the policy makers should work on providing education and training, expansion of credit deliver institutions, encouraging saving habit, accessing more information for crop insurance schemes and different activities for knowing crop insurance implementation in the study area.