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
Date
2020-05
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Abstract
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.
Description
Undergraduate thesis submitted to the Department of Business Administration, Ashesi University, in partial fulfillment of Bachelor of Science degree in Business Administration, May 2020
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Keywords
cocoa farming, production risks, crop insurance, Upper West Akim District