Edvin Zhllima, Orjon Xhoxhi, Drini Imami and Engjell Skreli
This paper examines the willingness to pay (WTP) for insurance premiums and identifies the factors that influence it in fruit, greenhouse vegetables and dairy farming. It…
Abstract
Purpose
This paper examines the willingness to pay (WTP) for insurance premiums and identifies the factors that influence it in fruit, greenhouse vegetables and dairy farming. It evaluates Albanian farmers' WTP for insurance products, emphasizing the key farm characteristics and factors that shape this willingness, offering valuable insights for establishing subsidized insurance.
Design/methodology/approach
The study is based on a structured rapid survey conducted in 2019 with 808 farmers and interviews with key experts and operators in the insurance market. Authors use a double-bounded dichotomous choice contingent valuation technique to gauge WTP for insurance products.
Findings
Results indicate that farmers' WTP ranges between 1.18 and 2.15% of their income from the main crop, depending on the farming activity, with dairy and greenhouse farmers showing a higher WTP than fruit farmers. WTP is positively related to exposure to climate hazards, engagement in modern market channels and contracting.
Research limitations/implications
The study used three different types of farms; thus, the findings are not strictly relevant to one activity. Subsequent research could employ choice experiments to evaluate alternative insurance schemes focusing on one sector.
Originality/value
The paper contributes to the literature by empirically testing various determinants for WTP for which there are no valid findings by using contingent choice analysis to explore WTP for crop insurance.
Details
Keywords
Orjon Xhoxhi, Andi Stefanllari, Engjell Skreli and Drini Imami
In the debate on rural development, contract farming (CF) is pointed out as a mechanism that reduces constraints on farmers' access to resources and improves farmers' welfare…
Abstract
Purpose
In the debate on rural development, contract farming (CF) is pointed out as a mechanism that reduces constraints on farmers' access to resources and improves farmers' welfare. However, the role of intermediaries' power in farmers' contracting decisions has not been investigated thoroughly. Considering that intermediaries' power affects farmers' businesses, livelihoods, risk and profit sharing, it becomes imperative to understand its effects on contracting decisions. Thus, the purpose of this paper is to investigate the dimensions over which intermediaries exercise the power they hold over farmers and how these power dimensions influence farmers' participation in CF.
Design/methodology/approach
A survey was conducted in the leading Albanian MAP production region, Malësi e Madhe, with 168 sage producers interviewed using a structured questionnaire. Exploratory factor analysis (EFA) is employed to develop measures for the latent variables of the study (e.g. intermediaries' power), and a logit regression is used to assess CF determinants.
Findings
The study finds that intermediaries exercise their power over different dimensions of farmers' activities, namely profit margin and activities related to product quality. The results point out that intermediaries' exercised power over farmers' margins and product quality-related activities decreased farmers' likelihood to engage in CF. On the other hand, a farmer's commitment to the intermediary and investment in specific assets increased the likelihood of participation. Furthermore, the analysis shows that CF does not leave small farmers out of high-value agricultural commodity chains (HVAC) for highly labour-intensive crops.
Research limitations/implications
The analysis focuses only on one sector with export orientation. Generalisation to other sectors is limited due to the specific features of the MAPs value chain.
Originality/value
The paper expands the debate on CF by adding the concept of intermediaries' power and its different dimensions of influence on farmers' participation in CF.
Details
Keywords
Orjon Xhoxhi, Domenico Dentoni, Drini Imami, Engjell Skreli and Olta Sokoli
In contexts of transition economies generally characterized by weak formal institutions, a rich literature remarks the important role of informal institutions in fostering…
Abstract
Purpose
In contexts of transition economies generally characterized by weak formal institutions, a rich literature remarks the important role of informal institutions in fostering entrepreneurial ecosystems. Nevertheless, in the agricultural context, little is known yet about how and why institutions shape farmer entrepreneurship. To better understand how informal institutions shape farmer entrepreneurship, this paper investigates how farmers' trust towards their buyers influence their entrepreneurial orientation (EO) in the rural context of a transition economy.
Design/methodology/approach
A structured survey was conducted in June–July 2017 with Albanian dairy farmers. In total, 238 milk producers were interviewed. Confirmatory factor analysis (CFA) is employed to develop measures for the latent variables of the study (e.g. farmers' trust, EO), and an instrumental variable (IV) approach is employed to estimate the effect of farmers' trust towards the buyer on their EO, by using farmers' reciprocity as a suitable IV.
Findings
Empirical findings reveal that innovativeness, risk-taking and proactivity represent effective dimensions of farmers' EO also in the rural context of a transition economy. Furthermore, farmers' trust towards their buyers shapes their EO, and, at the same time, younger and wealthier farmers are more likely to have higher levels of EO.
Research limitations/implications
The results show that there is an association between farmers’ wealth and their EO. This relationship can go both ways. However, cross-sectional studies are not appropriate to investigate feedback loops.
Originality/value
This study addresses a knowledge gap in the institution–entrepreneurship literature in transition economies, by making two contributions. First, it tests the measurement model for farmers' EO, an established psychological antecedent of farmers' entrepreneurial activity. Second, it tests the hypothesis that farmers' trust towards their buyers may influence their EO.