Effect of Livestock Insurance Policies on Farmers' Risk Management Strategies
DOI:
https://doi.org/10.47672/ajlp.2231Keywords:
Livestock, Insurance Policies, Farmers' Risk Management StrategiesAbstract
Purpose: The aim of the study was to assess the effect of livestock insurance policies on farmers' risk management strategies.
Methodology: This study adopted a desk methodology. A desk study research design is commonly known as secondary data collection. This is basically collecting data from existing resources preferably because of its low cost advantage as compared to a field research. Our current study looked into already published studies and reports as the data was easily accessed through online journals and libraries.
Findings: The study indicated that such insurance schemes effectively reduce the economic vulnerability of farmers by providing compensation for livestock losses due to various risks, including disease outbreaks, natural disasters, and market fluctuations. This financial safety net encourages farmers to invest more confidently in their livestock operations, as the potential losses are mitigated by insurance coverage. Moreover, the availability of livestock insurance has been found to positively influence farmers' decision-making processes, leading to improved adoption of modern agricultural practices and technologies. By alleviating the fear of catastrophic losses, these policies promote resilience within farming communities, enhancing their capacity to recover from adverse events. Furthermore, empirical evidence suggests that access to reliable insurance fosters long-term planning among farmers, facilitating sustainable agricultural practices and contributing to overall farm productivity and profitability. As a result, the integration of livestock insurance into agricultural risk management strategies not only safeguards livelihoods but also fosters agricultural development and resilience in the face of unpredictable challenges.
Implications to Theory, Practice and Policy: Prospect theory, agency theory and resource-based view may be used to anchor future studies on assessing the effect of livestock insurance policies on farmers' risk management strategies. Practical recommendations include designing and implementing pilot programs that offer customized livestock insurance products. On the policy front, advocating for initiatives that incentivize private insurance companies to offer affordable and comprehensive livestock insurance products is essential.
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