Determinants of Farmers’ Awareness about Crop Insurance: Evidence from Trans-Nzoia County, Kenya

Kenya has a long history in applying risk management mechanisms in agriculture. The initial agricultural insurance scheme was initiated by the colonial government in the 1930’s under the Guaranteed Minimum Returns (GMR); a form of crop insurance that guaranteed farmers a minimum price for their produce besides insuring their production against unavoidable crop failure. However, due to its abuse by stakeholders, the government made a decision to discontinue the programme in 1978. For many years after the discontinuation, agricultural insurance was virtually not available in the country. In order to revive the crop insurance industry, the private sector launched ‘Kilimo salama’, meaning safe farming in 2009. However, despite the noble intention to revive the crop insurance industry, a dearth of empirical knowledge exists on factors affecting farmer awareness about crop insurance product. In order to address the aforementioned knowledge gap, a binomial logit model was employed to assess the factors affecting awareness. The core findings of the study were that gender, education, and income of the household were the main determinants of awareness. These findings provide policy insights on key areas of intervention with respect to uptake of crop insurance in the country.

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Selected paper prepared for oral presentation at the 8th Annual Egerton University International Conference: 26th – 28th March, 2014

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