The willingness of cocoa farmers to insure their farms against production risks – The case [of the] Upper West Akim District of the Eastern Region Of Ghana
Cocoa production contributes largely to Ghana’s export earnings. Cocoa farmers in Ghana face both price risks and production risks. Ghana’s cocoa sector faces negligible price risk because the government pays a fixed producer price. However the cocoa sector is faced with different forms of production risks due to pest and disease, climate change, variations in weather patterns and outbreak of bush fires among others. Cocoa farmers in the Atiwa District, known to be one of the major cocoa producing districts in Ghana face these uncertain production risks that cause crop failures leading to low production yields. Therefore, one strategy to mitigate such risks is to insure their cocoa farms against uncertain risks to hedge against crop loss. Insurance helps to measure risk and protect farmers against crop failures. This study evaluated the major production risks faced by cocoa farmers in Ghana, the extent of the awareness of cocoa farmers in general insurance products, identified the factors that influence the willingness of cocoa farmers to insure their farms and identify the average price cocoa farmers are willing to pay to insure their farms. A random sampling approach was used to sample 133 cocoa farmers in the Upper West Akim District in the Eastern Region of Ghana. A Contingent Valuation Model is used to infer the utility maximization levels and design an appropriate questionnaire to measure the willingness of farmers to adopt crop insurance. Using a probit and logistic model, age and other income sources of cocoa farmers were found to influence the willingness of farmers to adopt crop insurance.
Undergraduate thesis submitted to the Department of Business Administration, Ashesi University, in partial fulfillment of Bachelor of Science degree in Business Administration, May 2020
cocoa farming, production risks, crop insurance, Upper West Akim District