Padjadjaran University Researchers Update Understanding of Agricultural Insurance (Economic Efficiency of Rice Farming: A Performance Difference among Agricultural Insurance Participant and Non-participant Farmer): Agriculture – Agricultural Insurance

2023 MAY 12 (NewsRx) -- By a News Reporter-Staff News Editor at Insurance Daily News -- Research findings on agricultural insurance are discussed in a new report. According to news reporting originating from Jatinangor, Indonesia, by NewsRx correspondents, research stated, “Agricultural insurance is a risk-sharing business arrangement to protect farmers who encounter problems with adverse selection and moral hazards caused by asymmetric information. This situation leads to market inefficiencies since people with more information commonly take advantage of less informed people.”

Our news editors obtained a quote from the research from Padjadjaran University: “This study aimed to compare the performance difference in the economic efficiency of rice farming between Rice Farming Insurance (RFI) participants and non-participant farmers. Primary data were collected from 202 farmers in Tangerang Regency. The marginal value product-marginal factor cost (MVP-MFC) approach was utilized to estimate resource use efficiency in rice production. The t-test was applied to determine differences in input allocation. The MVP-MFC discovered that the use of seeds was efficient for RFI participant farmers. Meanwhile, land, organic fertilizer, and pesticide had not been efficient, and inputs of inorganic fertilizer and labor were inefficient. Conversly, non-participant farmers indicated that the use of land, seeds, organic fertilizers, and pesticides had not been efficient, but the use of inorganic fertilizers and labor was inefficient. However, the comparison test revealed no difference in the input allocation efficiency between RFI participants and non-participant farmers. Hence, innovation in media and extension methods were required to change farmers’ behavior.”

According to the news editors, the research concluded: “Government policies were also necessary to ensure the availability of inputs. In addition, avoiding adverse selection and moral hazards in agricultural insurance was required to identify hazardous groups.”

For more information on this research see: Economic Efficiency of Rice Farming: A Performance Difference among Agricultural Insurance Participant and Non-participant Farmer. Agraris: Journal of Agribusiness and Rural Development Research, 2023,9(1):30-47. (Agraris: Journal of Agribusiness and Rural Development Research - http://journal.umy.ac.id/index.php/ag/index). The publisher for Agraris: Journal of Agribusiness and Rural Development Research is Universitas Muhammadiyah Yogyakarta.

A free version of this journal article is available at https://doi.org/10.18196/agraris.v9i1.108.

Our news journalists report that additional information may be obtained by contacting Eva Helmy, Agricultural Science Study Program, Faculty of Agriculture, Padjadjaran University, Jatinangor, West Java, Indonesia. Additional authors for this research include Lies Sulistyowati, Trisna Insan Noor, Iwan Setiawan.

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