Does agricultural insurance in Northern Philippines reduce income losses of farmers from different risks that they face

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Research Paper 01/06/2019
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Does agricultural insurance in Northern Philippines reduce income losses of farmers from different risks that they face

Vilma D. Conrado
J. Biodiv. & Environ. Sci. 14(6), 1-12, June 2019.
Copyright Statement: Copyright 2019; The Author(s).
License: CC BY-NC 4.0

Abstract

The study was conducted to determine whether agricultural insurance of the Philippine Crop Insurance Corporation can reduce income loss from different risks faced by the corn farmers in Cagayan Valley Region, Northern Philippines. The data collected through a collaborative project on “Evaluation of the Impact of Agricultural Insurance on Farmers” of the Cagayan State University and the Philippine Institute for Development Studies were used in this study. A total of 500 randomly taken samples 250 corn farmers with insurance matched with 250 farmers without insurance were taken from the list of the registered farmers. The farmers with insurance were further categorized as to those who received indemnity claim (125) and did not receive indemnity claim (125). These made up the three treatment groups. For each of the treatments, three strata were formed according to farm size: (1-0.5ha & below; greater than 0.5 to 1 ha and greater than 1ha). Descriptive statistics were used and mean net farm income was computed. The t-test was used to test the simple difference in net income per hectare within the three treatment groups. The farmers cited drought, typhoon and flood as the most severe shocks they encountered. Results further reveal that net farm income of farmers with insurance with claims was significantly higher at 5 percent level than those farmers without insurance for all farm size. Similarly, farmers with insurance with claims have higher net incomes than farmers with insurance but without indemnity claims in both years studied. Thus, agricultural insurance reduced income losses of corn farmers from different risks they experienced if an indemnity claim is received. It is therefore recommended that policies on indemnity coverage and assessment of damage to claim indemnity should be reviewed.

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