Factors influencing maize farmers’ interest in crop insurance in Swaziland

May 2018
By Nobuhle D. Mbonane and M.N. Makhura

1 Introduction

Agricultural production is subject to a number of risks, including drought, disease and floods, among others. Although agricultural risks are experienced by farmers in both developing and developed countries, their impacts may have different consequences according to the country (World Bank 2005). These risks can affect production choices, agricultural production and farm incomes, which affect the livelihoods of people dependent on agriculture. Further, they may impede future investments and the growth of agricultural businesses. Therefore, it is imperative to understand how risks affect agricultural production and how they can be mitigated. Agriculture is an important sector in sub-Saharan Africa, and serves as a stimulus for growth, provision of food security and assisting in poverty reduction (FAO 2000). However, food insecurity and poverty are still pressing issues in countries such as Swaziland, which is the focus of this paper. According to Cervantes-Godoy et al. (2013), the reason for food insecurity and poverty is the susceptibility of agriculture to production, policy and price risks.

The nature of agricultural production makes risk management a vital tool to protect farmers against potential losses. Crop insurance is one such tool that farmers need to maintain the sustainability of their agricultural enterprises, but there has been limited focus on the demand for crop insurance. In Swaziland the crop insurance industry is still underdeveloped, and there is an empirical gap in knowledge of the factors influencing farmers’ interest in purchasing such insurance. This paper identifies those factors amongst maize farmers in Swaziland. It provides an understanding of farm households’ need for crop insurance as part of a search for the best ways of protecting farmer’s livelihoods from agricultural risks and avoiding ineffective risk management strategies. The paper is structured as follows: Section 2 presents the background and discussed the relevant literature, Section 3 discusses methods and procedures, Section 4 presents the results and discussion, and Section 5 offers conclusions and recommendations. Read more

Download SA-TIED Working Paper 15/2018