Impact of crop insurance on cocoa farmers' income: an empirical analysis from Ghana

Risk is associated with every sector of an economy, and the pervasiveness of risk in agriculture is not new to farmers; they have, over the decades, developed ways to minimize and cope with it. The question is whether traditional strategies employed by farmers are adequate to curb unavoidable natural disasters. This study aims to see how crop insurance affects cocoa producers' incomes in Ghana. A well-structured questionnaire was delivered to a sample of 600 cocoa farmers in Ghana's Ashanti region, and data was collected using a multi-stage random sampling technique. Tobit and propensity score matching effect estimators were used to examine crop insurance's impact on cocoa farmers' income. We found that the age of a cocoa farmer has a negative effect on the farmer's income and is statistically significant. Our result also shows that the marital status of cocoa farmers has a significant positive impact on their income. The relationship between savings and farmers' income was positive in our estimation. It indicates that an increase in savings attitude leads to a higher income for the farmers. The result indicates that crop insurance had a significant positive impact on cocoa farmers' income in the Ashanti region. The study recommends that the government of Ghana, with urgency, design agricultural insurance policy that can capture various farmers in the country to enhance their income and reduce poverty. Again, insurers need to promote publicity through public seminars, training, and media advertising to improve farmer awareness and knowledge of the insurance scheme.