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  5. Encouraging Women’s Use of Agriculture-Related Financial Instruments
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Encouraging Women’s Use of Agriculture-Related Financial Instruments

Paper Session

Saturday, Jan. 6, 2024 8:00 AM - 10:00 AM (CST)

Grand Hyatt, Seguin B
Hosted By: Agricultural and Applied Economics Association
  • Chair: Patrick S. Ward, University of Florida

Protecting Women’s Productive Assets, But How?

Julian Arteaga
,
University of California-Davis
Michael Carter
,
University of California-Davis
Andrew Hobbs
,
University of San Francisco

Abstract

Index-based insurance is intended to protect farmers and their families from financial hardship when their crops and/ or animals experience a negative shock. This insurance is generally framed in a way that centers around production, despite the fact that it also prevents cuts to household consumption. In the case of index-based livestock insurance, this has meant focusing on livestock, which are generally owned and managed by men. As a result, the benefits for women have not been obvious. This paper shows that reframing insurance as a product that protects household expenses from cuts during a drought - rather than one that offsets livestock losses - significantly increases demand by women. This “family framing”
increased the probability of buying insurance by about 4% from a baseline of just over 3%. In other words, it more than doubled the probability of insurance purchase, increasing it from about 3% to about
8%. The effect of family framing is driven by individuals who received coupons for insurance in the past. We also find some evidence that family framing had an intensive margin effect, increasing the amount of insurance purchased as well as the probability of purchasing insurance.

Gender and Credit Access: Evidence from Bundling Agricultural Insurance and Credit in Ghana

Khushbu Mishra
,
Stetson University

Abstract

Women farmers across the developing world lack access to agricultural resources. Multiple market failures impede high-return investments, primarily, inability to provide adequate collateral and high covariant risk associated with rain-fed agricultural production. These barriers could be reduced by integrating microfinance and index insurance into agricultural credit markets. In this regard, we examine two products: (i) Micro-insured loans where borrowers acquire a personal index insurance contract (bundled with loans) to which they are the beneficiary, and (ii) Meso-insured loans where borrowers acquire an index insurance contract (bundled with loans) but lender is the beneficiary. Our results indicate that both micro-insured loans and meso-insured loans boost the likelihood of loan received and loan approvals for female farmers but only meso-level insured loans increase loan approvals for male farmers. Our results have important policy implications, especially offering differentiated products to male and female farmers to expand credit access and related technology adoption.

Impacts of a Digital Credit-Insurance Bundle for Landless Farmers: Evidence from a Cluster Randomized Trial in Odisha, India

Berber Kramer
,
IFPRI
Subhransu Pattnaik
,
IFPRI
Patrick S. Ward
,
University of Florida

Abstract

Smallholder farmers often lack documented land rights to serve as collateral for formal loans, and their livelihoods are inextricably linked to increasingly variable weather conditions. Resulting credit and risk constraints prevent them from making potentially profitable investments in their farms. We implemented a randomized evaluation of the impacts of KhetScore, an innovative credit scoring methodology that uses digital technologies and in particular remote sensing to unlock credit and insurance for smallholders including landless farmers in Odisha, a state in eastern India. In our treatment group, where we offered loans and insurance based on the KhetScore methodology, farmers -
and especially women - were more likely to purchase insurance, renew insurance coverage in subsequent years, and borrow from formal sources without substituting formal loans for informal loans. Despite increased borrowing, households in the treatment group faced less difficulty in repaying loans, suggesting that KhetScore loans, bundled with crop insurance, transferred risk and eased the burden of repayment. Moreover, the treatment increased agricultural revenues during the monsoon (kharif) season and reduced costs in the dry (rabi) season, enhancing profitability in both seasons. Positive and significant effects are found not only among baseline credit unconstrained farmers but also quantity rationed farmers, suggesting that KhetScore loans can help overcome supply-side credit constraints. Finally, women in the treatment group reported significantly higher levels of empowerment and mental health, manifested in increased participation in household decision-making and reduced feelings of stress, than women in the control group. In conclusion, digital technologies can contribute substantially to expansion in agricultural credit access, risk management, resilience, and wellbeing
among marginalized landless farmers.

Picture-Based Crop Monitoring and Social Comparison Improves Perceptions of Fairness and Raises Demand for Insurance: A Field Experiment in Ethiopia

Berber Kramer
,
IFPRI
Maria Porter
,
University of Arizona
Solomon Bizhuayehu Wassie
,
Bahir Dar University

Abstract

Index insurance is considered an important strategy to de-risk agriculture and increase smallholder farmers’ investments. However, insured farmers may develop mistrust of insurance if they experience crop losses and do not receive a payout, for instance because index insurance covers only covariate risks. At the same time, insurance for idiosyncratic risks would introduce differences in payouts within social networks, which might be considered unfair, introduce jealousy, and further depress demand for insurance. We conduct lab-in-the-field experiments with men and women farmers in Ethiopia to examine the effects of a novel insurance approach - picture-based insurance - which uses smartphone images of insured crops to verify crop losses and ensure insurance payouts for farmers with crop losses due to idiosyncratic events. Contrary to what some might expect, providing such insurance increases farmers’ perceived fairness of outcomes and willingness to pay, without introducing jealousy over neighbors receiving different payouts. While men’s willingness to pay is determined solely by the insurance product and not affected by social comparison, women’s willingness to pay is mainly affected by the social comparison treatment. Therefore, while addressing downside basis risk is needed to raise men’s demand for insurance, providing such social comparisons can be a useful tool for encouraging more women to take up index insurance.
JEL Classifications
  • A1 - General Economics