Smallholder maize farmer’s willingness to join index insurance in Vhembe District: Limpopo Province

Abstract

Only a negligible proportion of smallholder farmers in South Africa have crop insurance to mitigate production risks. This article analyses the demand for index-based crop insurance by smallholder farmers in the Vhembe district of Limpopo Province in South Africa based on their willingness to join a proposed insurance product. Questionnaires were used to collect once-off data from smallholder farmers. The contingent valuation method was used to analyse the willingness to buy a crop insurance product. Analysis revealed that 86% of the farmers were willing to purchase index-based crop insurance. Further analysis using the Probit regression model found that age, farm size, and risk management strategies such as government assistance and crop diversification influenced smallholder farmers` willingness to join the proposed crop insurance products. This study has shown that smallholder crop farmers` willingness to join crop insurance is high in the Vhembe district. The study recommends awareness and education concerning crop insurance purchases for smallholder farmers.