Crop Insurance Scheme Among Paddy Farmers in Kedah, Malaysia: Are They Willing to Pay?

Siti Aznor Ahmad*, Shamsul Bahrain Rawi, Bakti Hassan Basri and AmizamArzemi
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Siti Aznor Ahmad*: School of Economics, Finance and Banking, UniversitiUtara Malaysia, 06010Sintok, Kedah, Malaysia
Shamsul Bahrain Rawi: School of Economics, Finance and Banking, UniversitiUtara Malaysia, 06010Sintok, Kedah, Malaysia
Bakti Hassan Basri: School of Economics, Finance and Banking, UniversitiUtara Malaysia, 06010Sintok, Kedah, Malaysia
AmizamArzemi: School of Economics, Finance and Banking, UniversitiUtara Malaysia, 06010Sintok, Kedah, Malaysia

The Journal of Social Sciences Research, 2018, 1167-1173 Special Issue: 6

Abstract: This study examines the farmers’ willingness to pay (WTP) in contributing to the Crop Insurance Scheme (CIS) specifically among the paddy farmers in Kedah. The CIS reduces the risk that farmers face in the event of natural disaster such as flooding or crop failure causes from pest attack and crop diseases. In this study, we focus on three selected districts in Kedah. A total of 139 respondents were randomly selected from these areas. The CIS is based on a hypothetical product which contain of three main attributes; (1) type of coverage, (2) sum assured/benefit, (3) and premium payment or the price. Data are obtained by applying Choice Experiment (CE) technique and analyzed with the multinomial logit model (MNL). Two models are presented in this paper namely the basic model and the interaction model. The study shows, among others, that marginal willingness to pay to obtain protection from crop failure amongst the attributes ranges between RM33.69 to RM128.63 per year for the basic model. On the other hand the marginal willingness to pay for the interaction model ranges between RM19.42 to RM73.32.

Keywords: Uillingness to pay; Crop insurance scheme; Multinomial logit; paddy farmers; Choice experiment technique. (search for similar items in EconPapers)
Date: 2018
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