A choice experiment method to assess vegetables producers’ preferences for crop insurance

Agricultural producers face many risks in their economic activity due to weather conditions, plant or animal diseases, price volatility, policy changes and so on. One of the management tools to deal with some of these risks is the crop insurance system. In Catalonia (North-East of Spain) farmers’ participation in crop insurance for vegetables is low. Only 5 percent of the vegetables area is insured, when in Spain, as a whole, this percentage is around 20 percent. Different reasons have been suggested to explain this low participation ratio such as low risk perception, risk diversification, insurance cost or crop damage assessment rules, among others. However, no systematic research has been undertaken to assess farmers’ preferences for crop insurance in Catalonia. Through a survey of 93 vegetables farmers in the main productive areas in Catalonia, we conducted choice experiments to assess main farmers’ preferences for crop insurance. Each insurance policy was defined by 4 attributes: insurance cost; risks covered; minimum production damage level; and crop damage assessment rule. Results identify that insurance cost and crop damage assessment rules are among the most important factors to explain farmers’ behaviour toward crop insurance. These results allow us to suggest some recommendations specifically addressed to re-orientate the existing crop insurance policy in the vegetables sector in Catalonia.