1- Sari University of Agricultural Sciences and Natural Resources
2- Institute of Planning Research, Agricultural Economics and Rural Development
2- Institute of Planning Research, Agricultural Economics and Rural Development
Abstract: (4 Views)
Introduction and Objectives: The agricultural sector, due to its dependence on natural conditions and market dynamics, is constantly exposed to various risks and uncertainties. In addition to production-related risks arising from droughts, floods, pests, diseases, and climate change, fluctuations in agricultural product prices are among the most important factors contributing to farmers’ income instability. In recent years, increased market volatility and rapid price changes have reduced the economic security of agricultural producers. Under such circumstances, the use of risk management tools is essential to reduce farmers’ vulnerability and enhance income stability. Price insurance is one of the modern risk management instruments that compensates farmers for losses resulting from market price declines by guaranteeing a minimum product price. This instrument can play an important role in stabilizing farmers’ incomes, improving production planning, and encouraging investment in agricultural activities. Despite the development of agricultural insurance schemes in Iran, price insurance has not yet been widely adopted, and limited information is available regarding its acceptance among farmers. Since the success of such programs largely depends on farmers’ participation, understanding their preferences and the factors influencing adoption is of great importance. Therefore, the present study aimed to investigate the factors affecting the adoption of price insurance among rice producers in Amol County in order to provide a basis for designing insurance contracts that better reflect farmers’ needs and preferences.
Materials and Methods: This study employed the Choice Experiment (CE) approach to evaluate farmers’ preferences. In this method, respondents choose among a set of hypothetical alternatives, and the relative importance of different attributes can be estimated through the analysis of their choices. The main attributes of price insurance were identified through a review of previous studies, consultation with agricultural insurance experts, and an assessment of rice market conditions. The selected attributes included insurance premium and compensation level, price monitoring location, insurance coverage period, and premium payment method. Several levels were defined for each attribute, and a set of choice scenarios was generated using an appropriate experimental design. The statistical population consisted of rice producers in Amol County. Based on the Johnson and Orme rule, the minimum sample size was determined to be 84 respondents. However, to improve the reliability of the results, 91 questionnaires were completed in 2025. Data were collected through face-to-face interviews with farmers and analyzed using the Mixed Logit Model. This model allows the estimation of the effects of insurance attributes while accounting for heterogeneity in farmers’ preferences and decision-making behavior regarding insurance contracts.
Results: The descriptive statistics showed that the average age of the sampled farmers was approximately 50 years, while the average farming experience was nearly 32 years. In addition, the average cultivated area was about 12,000 square meters, and average rice production exceeded 3 tons. These findings indicate substantial diversity in the demographic, economic, and production characteristics of the respondents and confirm the heterogeneous nature of the farming population. The results of the Mixed Logit Model revealed that various attributes of the price insurance contract had significant effects on farmers’ decisions. The price monitoring location had a positive and statistically significant effect, indicating that farmers preferred reliable and transparent reference markets. This finding suggests that confidence in the price determination mechanism is a key factor in the success of price insurance programs. Furthermore, a one-month coverage period had a negative and significant effect on farmers’ utility, indicating a preference for contracts with longer coverage periods. Longer coverage periods provide greater security and more effective protection against market price fluctuations. Among the premium payment options, discounted cash payment generated the highest utility for respondents and significantly increased the likelihood of insurance adoption. In contrast, some installment payment options did not have a significant effect on farmers’ choices. This finding implies that financial incentives can play an important role in encouraging participation in insurance programs. The results also showed that the insurance premium level was a critical determinant of adoption. Higher premium costs reduced farmers’ willingness to participate, highlighting the importance of setting premium rates that are compatible with farmers’ financial capacities. The interaction effects confirmed the existence of significant heterogeneity in farmers’ preferences. The findings indicated that age, cultivated area, and income significantly influenced sensitivity to insurance premiums. Older farmers and those operating larger farms were more sensitive to premium increases. This suggests that a uniform insurance design may not effectively meet the needs of all farmers and that individual and economic differences should be considered when designing insurance products.
Conclusion: The results of this study demonstrated that the adoption of price insurance among rice producers is strongly influenced by both insurance contract attributes and farmers’ individual characteristics. Price monitoring location, insurance coverage period, premium payment method, and premium level were identified as the most important determinants of farmers’ choices. Furthermore, the existence of heterogeneous preferences among farmers indicates that policymakers and insurance providers should pay particular attention to individual, economic, and production-related differences when designing insurance products. Accordingly, it is recommended that price insurance contracts be designed with greater flexibility, longer coverage periods, reliable price monitoring systems, and financial incentives such as discounts for cash premium payments. In addition, increasing farmers’ awareness of the benefits and functions of price insurance can contribute significantly to the wider adoption of this instrument. The implementation of such policies can enhance farmers’ participation in price insurance programs, reduce the adverse effects of market volatility, improve risk management, and promote the economic sustainability of the agricultural sector.
Materials and Methods: This study employed the Choice Experiment (CE) approach to evaluate farmers’ preferences. In this method, respondents choose among a set of hypothetical alternatives, and the relative importance of different attributes can be estimated through the analysis of their choices. The main attributes of price insurance were identified through a review of previous studies, consultation with agricultural insurance experts, and an assessment of rice market conditions. The selected attributes included insurance premium and compensation level, price monitoring location, insurance coverage period, and premium payment method. Several levels were defined for each attribute, and a set of choice scenarios was generated using an appropriate experimental design. The statistical population consisted of rice producers in Amol County. Based on the Johnson and Orme rule, the minimum sample size was determined to be 84 respondents. However, to improve the reliability of the results, 91 questionnaires were completed in 2025. Data were collected through face-to-face interviews with farmers and analyzed using the Mixed Logit Model. This model allows the estimation of the effects of insurance attributes while accounting for heterogeneity in farmers’ preferences and decision-making behavior regarding insurance contracts.
Results: The descriptive statistics showed that the average age of the sampled farmers was approximately 50 years, while the average farming experience was nearly 32 years. In addition, the average cultivated area was about 12,000 square meters, and average rice production exceeded 3 tons. These findings indicate substantial diversity in the demographic, economic, and production characteristics of the respondents and confirm the heterogeneous nature of the farming population. The results of the Mixed Logit Model revealed that various attributes of the price insurance contract had significant effects on farmers’ decisions. The price monitoring location had a positive and statistically significant effect, indicating that farmers preferred reliable and transparent reference markets. This finding suggests that confidence in the price determination mechanism is a key factor in the success of price insurance programs. Furthermore, a one-month coverage period had a negative and significant effect on farmers’ utility, indicating a preference for contracts with longer coverage periods. Longer coverage periods provide greater security and more effective protection against market price fluctuations. Among the premium payment options, discounted cash payment generated the highest utility for respondents and significantly increased the likelihood of insurance adoption. In contrast, some installment payment options did not have a significant effect on farmers’ choices. This finding implies that financial incentives can play an important role in encouraging participation in insurance programs. The results also showed that the insurance premium level was a critical determinant of adoption. Higher premium costs reduced farmers’ willingness to participate, highlighting the importance of setting premium rates that are compatible with farmers’ financial capacities. The interaction effects confirmed the existence of significant heterogeneity in farmers’ preferences. The findings indicated that age, cultivated area, and income significantly influenced sensitivity to insurance premiums. Older farmers and those operating larger farms were more sensitive to premium increases. This suggests that a uniform insurance design may not effectively meet the needs of all farmers and that individual and economic differences should be considered when designing insurance products.
Conclusion: The results of this study demonstrated that the adoption of price insurance among rice producers is strongly influenced by both insurance contract attributes and farmers’ individual characteristics. Price monitoring location, insurance coverage period, premium payment method, and premium level were identified as the most important determinants of farmers’ choices. Furthermore, the existence of heterogeneous preferences among farmers indicates that policymakers and insurance providers should pay particular attention to individual, economic, and production-related differences when designing insurance products. Accordingly, it is recommended that price insurance contracts be designed with greater flexibility, longer coverage periods, reliable price monitoring systems, and financial incentives such as discounts for cash premium payments. In addition, increasing farmers’ awareness of the benefits and functions of price insurance can contribute significantly to the wider adoption of this instrument. The implementation of such policies can enhance farmers’ participation in price insurance programs, reduce the adverse effects of market volatility, improve risk management, and promote the economic sustainability of the agricultural sector.
Keywords: Choice Experiment, Mixed Logit Model, Risk Management, Insurance Adoption, Farmers’ Preferences, Price Insurance.
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