Journal of Social Science for Policy Implications

Willingness to Pay for Farm Insurance by Smallholder Cocoa Farmers in Ghana
Gideon Danso-Abbeam, Kwabena Nyarko Addai, Dennis Ehiakpor

Abstract
This study analyzes the willingness to pay for cocoa price insurance in the Ghanaian cocoa industry using contingent valuation (CV) method to collect primary data from 201 cocoa farmers in Bibiani-Anhiawso-Bekwai district, Ghana. The study employed descriptive statistics to analyze the demographic characteristics of the sampled farmers in the study area. 57.71 percent of the sampled cocoa farmers were found to respond positively to cocoa price insurance. Independent double-hurdle model was used to determine factors influencing farmer’s adoption of cocoa price insurance and the premium farmers are willing to pay. Empirical results from the study revealed that farmers interest in cocoa price insurance was affected by range of explanatory variables such as marital status, number of years in cocoa farming, educational attainment, household size, farm size, ownership of farm land for farming, age of cocoa farm, age squared of cocoa farm, farmers being aware of the insurance scheme and income from cocoa farm. On the other hand, the premium farmers were willing to pay was significantly influence by marital status, educational attainment, ownership of farm land for farming, farmer’s awareness of insurance scheme and income from cocoa farm. Cocoa farmers are on average willing to pay between 9.3% and 10.5% of the option value they intend to receive as premium depending on the value. The study recommends that particular attention be given to education of farmers on the significance of insuring their cocoa farms.

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