The relationship between crop insurance take-up, technical efficiency, and investment in Hungarian farming

Zubor-Nemes, Anna (2021) The relationship between crop insurance take-up, technical efficiency, and investment in Hungarian farming. Studies in Agricultural Economics, 123 (3). pp. 122-130. DOI

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Climate change is putting increasing pressure on agriculture, which might be reduced by paying more attention to risk management, production efficiency and farm investment. This paper describes the interrelationship between crop insurance take-up, technical efficiency and investment in Hungarian farming using a system of simultaneous equations. The empirical analysis is based on farm accountancy data for the period 2001-2019. Results suggest that both technical efficiency and investment have positive and significant effects on insurance take-up. Accordingly, higher technical efficiency and a higher investment rate both lead to increased insurance usage. In terms of its relationship with efficiency, insurance has a positive and significant coefficient, but investment does not have a significant influence on technical efficiency. Where investment is concerned, insurance usage has a positive and significant effect, but the role of technical efficiency is insignificant. Results suggest that policy interventions that stimulate any of the three factors can potentially have additional positive impacts through spill-over effects on other factors. These effects could be further enhanced if, for instance, interventions focusing primarily on insurance take-up also pay attention to investment by differentiating insurance premium subsidies, depending on whether there is an ongoing (or operating) investment that can be linked to weather-related risk management.

Item Type:Article
Uncontrolled Keywords:risk management, farm performance, system of simultaneous equations, Data Envelopment Analysis
JEL classification:G22 - Insurance; Insurance Companies; Actuarial Studies
L25 - Firm Performance: Size, Diversification, and Scope
Q12 - Micro Analysis of Farm Firms, Farm Households and Farm Input Markets
Subjects:Economic development
ID Code:7130
Deposited By: MTMT SWORD
Deposited On:05 Jan 2022 13:48
Last Modified:05 Jan 2022 13:48

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