Determinants of crop farmers’ utilization of agricultural insurance scheme in Osun State, Nigeria

Abstract

The Nigeria Agricultural Insurance Scheme (NAIS) was implemented with the aim of cushioning economic losses in agricultural production, and reducing high risk and uncertainties often associated with agricultural enterprise such as pest and disease invasion, crop failure and natural disasters. Hence, this study investigated the determinants of utilization of NAIS among crop farmers in Osun State by examining the socio-economic characteristics, insurance characteristics, knowledge on agricultural insurance scheme, constraints and utilisation of agricultural insurance. Using a multi-stage sampling procedure, 60% of insured crop farmers in the study area were randomly selected given a total of 132 respondents. Data were analysed using descriptive statistics, Chisquare, Pearson Product Moment Correlation and multiple linear regression at ?0.05. The results reveal that mean age of respondents was 41.9 years, 80.3% were males, 93.9% were married, and 53.0% had tertiary education. The mean monthly income from agricultural activity was ?27, 231. Over half (50.8%) of respondents derive credit from commercial banks and had an average farm size of 9.30 acres. Radio (0.23) was the most preferred
source of information and the use of crop insurance policy as collateral to obtain loan was the reasons for insuring crop. Knowledge of agricultural insurance was high among 54.5% of the respondents. Delay in indemnity by insurance companies (0.84) was the most severe constraints to utilization. About two-third (64.6%) had high level of utilisation of agricultural insurance scheme. Education (? = 0.329), use of hired labour (? = 0.228), years of farming experience (? = 0.295), and constraints to utilisation (? = -0.275) were predictors of utilization of agricultural insurance. It is recommended that the scheme should hasten the indemnification of clients.