Farmers’ perception and determinants of dairy cattle insurance in Nepal

Figures & data

Figure 1. Map of study area

Table 1. Description of the variables used in probit model

Variables	Type	Description of the variables	Expected sign
Dependent variable (Yi)	Dummy	Cattle insurance status (1 = Insurer, 0 otherwise)
Independent variables
AGE	Continuous	Age of the household head (Year)	±
GENDER	Dummy	Gender of the household head (1 = Male 0 otherwise)	±
EDUCATION	Continuous	Education of the household head (Years of schooling)	±
HHSIZE	Continuous	Household size (Number of members)	-
MIGRATION	Dummy	Migration status of the household member to abroad (1 = Yes 0 otherwise)	+
LAND	Continuous	Land holding of household (Hectare)	-
EXPRENCE	Continuous	Experience in cattle rearing (Years)	-
HOUSE	Dummy	House type (1 = Pakki house 0 otherwise)	-
LOG_LIVEincome	Continuous	Income from livestock (Rupees)	+
BREED	Dummy	Breed of cattle (1-Improved breed 0 otherwise)	+
SHED	Dummy	Cattle shed (1 = Traditional 0 otherwise)	-
MEMBER	Dummy	Membership in social organization (1 = Yes 0 otherwise)	+
TECHNICAL_ASS	Dummy	Technical assistance (1 = Yes 0 otherwise)	-
ACCESS_LOAN	Dummy	Access to loan (1 = Yes 0 otherwise)	+
DISTRICT	Dummy	District of the respondents (1 = Chitwan 0 Nawalparasi)	±

Source: Own illustrations based on field survey data

Table 2. Socio-demographic characteristics of the respondents by cattle insurance

Variables	Overall (N = 160)	Insurers (n = 80)	Non-insurers (n = 80)	Mean Difference	T-value
Age of the respondents (in years)	41.47	38.42	44.51	−6.09	−2.862***
Schooling of the respondents (in years)	7.52	8.00	7.03	0.97	1.440
Economically active household members (15–59 years age)	3.89	3.68	4.15	−0.52	−1.682*
Dependent household members	1.55	1.38	1.72	−0.32	−1.527
Total household size	5.45	5.02	5.87	−0.85	−2.185**
Land holding (ha.)	0.36	0.39	0.33	0.05	0.821
Migration status of HH member
Migrated	35.0%	28.7%	41.3%	Chi-square value: 2.747* (at 1 df and P = 0.097)

Note: ***, ** and * indicate significance at 1%, 5% and 10% levels, respectively.

Table 3. Number of cattle insured and claims made by district

Variables	Overall (N = 80)	Chitwan (n = 40)	Nawalparasi (n = 40)	Mean Difference	T-value	P Value
Insured Cattle	5.98	4.12	7.85	−3.725**	−2.162	0.037
Number of claims	0.27	0.100	0.450	−0.350***	−2.852	0.006

Note: *** and ** indicate significant at 1% and 5% levels, respectively.

Figure 2. Source of technical service providers by insurance

Figure 3. Farmers’ perception on risk related to cattle rearing by insurance

Figure 4. Risk management tools used by respondents who experienced cattle loss

Table 4. Perception on different risk management tools used by respondents who experienced cattle loss

Risk Management tools	n	Not important (%)	Moderately Important (%)	Very Important (%)	Index of importance	Rank
Informal (friends/relatives)	57	19	39	42	0.61	III
Co-operative schemes	57	7	54	39	0.66	II
Schemes by ADB/N^1	57	44	35	21	0.39	IV
Cattle Insurance	57	5	23	72	0.83	I
Sale of assets	57	70	25	5	0.18	VI
Sale of livestock	57	70	26	4	0.17	VII
Government relief	57	39	40	21	0.41	V

¹ADBN = Agriculture Development Bank, Nepal

Table 5. Satisfaction of cattle insurers regarding various factors affecting insurance policy

Factors affecting insurance policy		Very Satisfied (%)	Satisfied (%)	Neutral (%)	Dis-satisfied (%)	Very Dissatisfied (%)	Chi-square	Satisfaction Index	Rank
Risk Coverage	C	22.5	52.5	7.5	7.5	10.0	11.525**	0.72	I
	N	52.5	27.5	5.0	0.0	15.0
Valuation of animals	C	22.5	47.5	10.0	10.0	10.0	3.875	0.69	III
	N	40.0	37.5	5.0	5.0	12.5
Premium amount	C	22.5	52.5	2.5	17.5	5.0	7.254	0.71	II
	N	35.0	52.5	0.0	2.5	10.0
Subsidy policy of government	C	17.5	52.5	12.5	12.5	5.0	8.333*	0.61	V
	N	12.5	37.5	12.5	37.5	0.0
Insurance procedure	C	27.5	52.5	5.0	7.5	7.5	8.032*	0.63	IV
	N	17.5	35.0	7.5	30.0	10.0
Claim procedure	C	2.5	25.0	25.0	22.5	25.0	7.215	0.41	VII
	N	5.0	30.0	10.0	42.5	12.5
Quickness in paying claim	C	5.0	10.0	40.0	27.5	17.5	18.820**	0.37	VIII
	N	2.5	25.0	2.5	50.0	20.0
Identification of indemnity level	C	0.0	27.5	40.0	10.0	22.5	12.728**	0.51	VI
	N	2.5	52.5	25.0	17.5	2.5

Note: C and N represent Chitwan and Nawalparasi district, respectively. **and* indicate significant at 5% and 10% levels, respectively.

Table 6. Reasons for not joining cattle insurance

Reasons for not joining cattle insurance	Multiple Responses
	Frequency	Percent
Not aware of cattle insurance	32	27.8
No need of cattle insurance due to small herd size	13	11.3
Lack of premium paying capacity from cattle’s farmer	5	4.3
Not aware of facilities available after insurance	37	32.2
Inadequate publicity of scheme mechanism	12	10.4
Complex documentation needed	8	7.0
No faith in scheme/agency	4	3.5
Delay in claim payment observed in community	4	3.5
Total	115	100.0

Note: Multiple responses were taken to determine the reasons for not joining cattle insurance.

Table 7. Results from probit model for factors determining dairy cattle insurance

Variable	Coefficient	Std. Err.	z	P>|z|	dy/dx
AGE	−0.019	0.005	−1.47	0.141	−0.007
GENDER#	−0.295	0.118	−0.99	0.324	−0.116
EDUCATION	−0.025	0.016	−0.64	0.522	−0.010
HHSIZE	−0.126**	0.026	−1.97	0.049	−0.050**
MIGRATION#	0.102	0.108	0.38	0.705	0.040
EXPRENCE	0.010	0.005	0.82	0.414	0.004
NO_CATTLE	0.092**	0.018	2.00	0.045	0.036**
LOG_LIVEincome	0.368**	0.070	2.11	0.035	0.146**
BREED#	1.225***	0.094	4.67	0.000	0.436**
SHED#	0.331	0.110	1.20	0.232	0.131
MEMBER#	0.205	0.128	0.64	0.522	0.081
TECHNICAL_ASS#	−0.327	0.103	−1.26	0.207	−0.130
ACCESS_LOAN#	1.036**	0.165	2.23	0.026	0.368**
DISTRICT#	−0.572*	0.124	−1.85	0.065	−0.228*
Summary statistics
Number of observations:	160
LR Chi-square (14):	73.29***
Prob > chi-square:	0.000
Pseudo R^2:	0.33

Notes: dy/dx is Marginal effects after Probit. “#” indicates for discrete change of dummy variable from 0 to 1. ***, **, and * represent significant at 1%, 5%, and 10% levels, respectively.