WILLINGNESS TO PARTICIPATE IN POULTRY INSURANCE SCHEME BY SMALLHOLDER POULTRY FARMERS IN TAMALE IN THE NORTHERN REGION OF GHANA

Abstract

There is no concrete evidence regarding the preparedness of poultry farmers of Tamale to adopt poultry insurance as a strategy to manage the diverse risks and uncertainties affecting the poultry industry. This study assessed farmers’ perception of poultry farm risks and willingness to pay (WTP) insurance premiums for poultry farm insurance (as a risk management strategy) in Tamale and surrounding communities in the Northern Region of Ghana. Using data from a systematic sample of 214 smallholder poultry farmers, the study employed risk attitude and perception index scales, the double bounded contingent valuation method, and the ordered logit model to measure farmers’ risk perceptions and attitudes, evaluate actual premiums they are willing to pay and to analyze the factors influencing the farmers’ WTP respectively. The results indicate that risks associated with climate, production shocks, and biological conditions are perceived by farmers to have dire consequences on poultry enterprises. Risk aversion attitudes towards poultry production dominate among farmers in the study area. WTP for poultry insurance is quite significant with a mean of GH₵1.52/bird/production cycle in anticipation of GH₵50.00 indemnity per bird. Furthermore, the level of education attained, risk aversion attitudes and disaster experience have significant positive correlations with the probability of paying higher premiums whereas farming experience, access to credit and farm size show negative correlations. Lack of trust in insurance companies as well as bureaucratic procedures in claim settlements are other potential discouraging factors for readiness to purchase insurance package. The study recommends that private insurance agencies collaborate with state agencies to take advantage of the insurance market potential to design and roll out insurance packages that meet the needs of smallholder farmers