@article{Ahsan:197301,
      recid = {197301},
      author = {Ahsan, Syed M. and Rashid, Salim},
      title = {State Run Crop Insurance as a PPublic Policy in  Accelerating Agricultural Growth in Developing Countries},
      address = {1983},
      number = {990-2016-77465},
      pages = {5},
      year = {1983},
      abstract = {Modern varieties of agricultural crops, commonly referred  to as high yielding
varieties (HYVs), are being  increasingly looked upon as a major source of  the
additional foodgrain required to attain  self-sufficiency in a number of Third
World countries. In  spite of the demonstrated productivity gains with HYVs,  the
adoption rate has been rather disappointing in many of  those countries. Part of
the reason behind the farmer's  reluctance must arise from the unfamiliarity and
high costs  of the new technology (increased cost of seeds, fertilizer,  pesticides,
and irrigation). One way of conceptualizing  this would be to recognize that
HYVs are riskier than  traditional varieties. Even though the vagaries of  nature
may affect all crops similarly, the higher costs  incurred in planting HYVs result
in bigger losses in times  of poor yields. Thus although the potential return  is
higher, the possible losses are also higher. Lack of  familiarity with the new
technology may, in itself, be a  source of subjective risk (Lipton).
In this paper we show  that a state run crop insurance programme may play a
major  role in the farmer's ability to take risks and allocate  more land to
cultivation of HYVs. The reasons for modelling  a state run scheme are several.
At the theoretical level,  the recent literature suggests that insurance simply
may  not be provided by competitive markets due to imperfect  information about
the risk classes to which different  farmers belong. At an empirical level,
private insurance  companies do not exist for agriculture alone. Further,  private
insurance companies, where they exist, use a large  part of their budget to sell
insurance. Although in a  competitive environment one would expect that the
increased  social benefits from competition would outweigh the  transaction costs,
in view of the continual fight against  starvation in many developing countries,
it seems needless  to waste resources selling insurance. There are thus  sound
theoretical and practical reasons for modelling crop  insurance as a national
programme.
The paper suggests that  the main thrust of the theoretical findings has  already
found empirical support from whatever scarce  evidence is available. In this
light, prospects for a state  run insurance programme in terms of food  selfsufficiency
are discussed for Bangladesh.},
      url = {http://ageconsearch.umn.edu/record/197301},
      doi = {https://doi.org/10.22004/ag.econ.197301},
}