Liu YANG, Liwen XIANG, Jing ZENG

1. Poverty Alleviation and Development Office of Enshi Municipal Government, Enshi 445000, China; 2. School of Business, Jianghan University, Wuhan 430056, China; 3. School of Economics and Management, Yangtze University, Jingzhou 434023, China

Abstract Agricultural insurance can avoid the risks of agricultural production and operation to a large extent, promote agricultural development and increase farmers’ income, and lay a solid foundation for rural revitalization. At present, China’s agricultural insurance is in the stage of all-round development, and there are still many problems, especially the farmers’ mistrust of agricultural insurance and their weak willingness to participate in agricultural insurance. Based on the data and information obtained from the field visit and questionnaire survey in Enshi Prefecture, this paper makes an empirical analysis on the factors affecting farmers’ agricultural insurance demand by using binary Logistic regression model. According to the conclusion of the analysis, this paper puts forward the corresponding measures and suggestions from the three dimensions of the government, insurance companies and farmers.

Key words Agricultural insurance, Demand willingness, Data analysis, Influencing factors

1 Introduction

Agricultural production activities have the characteristics of long time and many procedures, which are easily affected by natural disasters, resulting in economic losses of agricultural producers and adverse effects on rural development. Agricultural insurance is an economic guarantee measure for the economic losses caused by accidents, natural disasters, epidemic diseases and other accidents in the process of agricultural production.

By providing policy and various commercial insurance to agricultural producers, China can reasonably and effectively reduce the losses caused by various disasters and accidents to agricultural production, stabilize farmers’ income, and promote and guarantee the development of China’s agriculture and rural economy[1]. China’s central finance launched agricultural insurance subsidies in 2007 and has paid a total of more than 240 billion yuan in indemnity by 2019. The data show that the scale of China’s agricultural insurance market has grown rapidly and its safeguard role has been brought into full play.

In view of the guarantee effect of agricultural insurance on agricultural production, it is necessary for agricultural producers to demand agricultural insurance. The demand for agricultural insurance is the demand of agricultural producers for agricultural insurance in a certain period and at a certain price level. The reality shows that at present, the level of comprehensive agricultural production in mountain areas of our country is low, the education level of farmers is not high, and the growth of income is slow, which affect the ability of farmers to buy agricultural insurance. On the other hand, the insurance policy subsidy of characteristic agricultural products is inadequate, the degree of risk prevention of policy-oriented agricultural insurance is not high, the coverage is low, and the threshold of commercial insurance is high, which restrict the growth of agricultural insurance demand[2]. Especially for farmers in poor mountainous areas, a sudden natural disaster will push them to the brink of poverty. Therefore, for the poor mountain areas with poor natural conditions and high incidence of natural disasters, it is very necessary and urgent to expand the coverage of agricultural insurance and improve the intensity of agricultural insurance.

Enshi Autonomous Prefecture is the only minority autonomous prefecture in Hubei Province. The whole territory is a mountainous area with frequent and multiple natural disasters. The ability of agriculture to avoid disasters and resist risks is weak, and agricultural insurance is needed to reduce farmers’ economic losses and develop agricultural production. However, as the eight counties and cities under the jurisdiction of Enshi Prefecture are all poverty-stricken counties and cities supported by the state, the average annual disposable income of rural residents is relatively low, and the agricultural insurance premium rate is as high as 6%. Most farmers cannot afford agricultural insurance premiums. Therefore, at present, the willingness of farmers in Enshi Prefecture to participate in agricultural insurance is not high, and the demand for agricultural insurance is seriously insufficient. Consequently, it is of great practical significance to investigate and study the agricultural insurance demand of farmers in Enshi Prefecture.

2 Empirical analysis on the influencing factors of farmers’ agricultural insurance demand in Enshi Prefecture

2.1 Data sourcesThis study uses the combination of field visits and questionnaires to collect data and understand the situation. On the one hand, we conducted face-to-face interviews with farmers in Xuanen County, Enshi Prefecture, and on the other hand, we distributed questionnaires to farmers in seven other counties and cities. In this survey, 120 farmers were randomly selected, 120 questionnaires were distributed accordingly, 115 questionnaires were recovered, 115 were valid, and the effective recovery rate was 95%. The main contents of the survey are as follows: the level of education, the area of contracted land, the total annual household income, the share of agricultural income in total household income, the number of natural disasters that caused more than 20% income loss in the past three years, farmers’ understanding of agricultural insurance, and farmers’ satisfaction with agricultural insurance.

2.2 Model selection and variable descriptionIn this study, the binary Logistic model is used to quantitatively analyze the factors that affect the agricultural insurance demand of farmers in Enshi Prefecture. That is, the seven influencing factors mentioned above are quantified.X1-X7are the explanatory variables;Yis the explained variable, as the dummy variable used to indicate whether farmers buy agricultural insurance or not;Yi=0 means "no" andYi=1 means "yes" (Table 1).

Table 1 Description of variables

Variable name Variable descriptionExplained variableWhether farmers buy agricultural insurance or not Yes=1 No=0Explanatory variableEducation level Primary school=1; Junior high school=2; Junior high school or above=3Contracted land area 666-2 000 m2=1; 2 667-4 000 m2=2; 4 667-6 000 m2=3; 6 667 m2 and above=4Total annual household income 10 000-20 000 yuan=1; 2 000-30 000 yuan=2; 30 000-40 000 yuan=3; 40 000 yuan or above=4The share of agricultural income in total house-hold income 0%-25%=1; 26%-50%=2; 51%-75%=3; 76%-100%=4The number of natural disasters that caused more than 20% loss of income in the past three years 0=1; 1=2; 2-3=3; 4 or above=4Farmers understanding of agricultural insurance Have no idea about it=1; have heard of it a little=2; know that=3; know very well that=4Farmers satisfaction with agricultural insurance products Very dissatisfied=1; not very satisfied=2; satisfied=3; relatively satisfied=4; very satisfied=5

2.3 Model constructionAccording to the assumed explanatory variables and explained variables, the binary Logistic model is established as follows:

Zi=α+βkXki

wherePimeans that farmers bought agricultural insurance; 1-Pimeans that farmers did not buy agricultural insurance.

Therefore, the probability of occurrence and non-occurrence is:

Take logarithms on both sides of the equation to get a linear function:

whereXkiis a series of explanatory variables;αandβare coefficients to be estimated.

2.4 Results and analysisThis paper makes an empirical analysis on the factors that affect the agricultural insurance demand of farmers in Enshi Prefecture by using binary Logistic regression model. SPSS 19.0 software is used for regression analysis to complete the data processing. The regression results are as follows: as shown in Table 2, using the data of 115 farmers for binary Logistic regression, the accuracy of predicting whether farmers will buy agricultural insurance is 87%. In fact, the true degree of fitting of the binary Logistic regression model is to use the binary Logistic to predict, and the predicted value is higher than 60%, indicating that the model fits well.

Table 2 Classification

ObservedPredictedWhether to buy agriculturalinsurance or not01PercentagecorrectionStep 1Whether to buy agricul-tural insurance or not0184961693.364.0Total percentage87.0

In addition, from the Hosmer test, we can know that the zero hypothesis is that the model can well fit with the observed value, andP=0.603>0.05, accepting the zero hypothesis, indicating that the model can fit well with the real data. This shows that the binary Logistic regression model can well reflect the relationship between variables.

The results of the model are shown in Table 3. The significance level of education level, the share of agricultural income in household income, the number of natural disasters that caused more than 20% income loss in the past three years, and farmers’ understanding of agricultural insurance is all less than 0.05. This shows that these four factors have a significant correlation with whether farmers buy agricultural insurance or not, which will affect farmers’ demand for agricultural insurance. The regression coefficients of these four factors are 1.291, 0.95, 1.935 and 1.152, respectively. However, the significance level of contracted land area, annual household income and farmers’ satisfaction with agricultural insurance products is more than 0.05 (not significant).

Table 3 Model results

ItemBS.EWalsdfSig.95% C.I. of Exp (B)Exp (B)Lower limitUpper limitEducation level (X1)1.2910.5415.68510.0173.6361.25810.510Contracted land area (X2)0.3000.4100.53710.4641.3500.6053.017Total annual household income (X3)-0.0170.4470.00110.9700.9840.4092.363The share of agricultural income in total household income (X4)0.9500.4763.99010.0462.5871.0186.573The number of natural disasters that caused more than 20% loss of income in the past three years (X5)1.9350.6169.86110.0026.9242.06923.170Farmers understanding of agricultural insurance (X6)1.1520.5344.65910.0313.1651.1129.011Farmers satisfaction with the insurance amount, premium and type of agricultural insurance products (X7)0.3390.4130.67410.4121.4030.6253.151Constant-14.8103.08023.120100

Based on the model analysis of the sample data, it is concluded that the contracted land area, annual household income and farmers’ satisfaction with agricultural insurance products have no significant impact on farmers’ demand for agricultural insurance, but it is not without influence. The education level, the share of agricultural income in household income, the number of natural disasters that caused more than 20% income loss in the past three years, and farmers’ understanding of agricultural insurance have a significant impact on farmers’ demand for agricultural insurance. The specific analysis is as follows.

2.4.1Analysis of significant influencing factors. Education level. The higher the level of education, the more knowledge of agricultural insurance, the higher the recognition of agricultural insurance, the easier to accept agricultural insurance. The education level of the farmers surveyed is mainly distributed between primary school and junior high school. In general, farmers at the primary school level have a conservative mentality and are less likely to take the initiative to accept new things. Farmers with junior high school education or above will take the initiative to understand the relevant information of agricultural insurance, and they are more likely to choose to buy agricultural insurance. The share of agricultural income in total household income. The higher the proportion of agricultural income, the more farmers’ income needs to rely on agriculture, while agricultural insurance can disperse risks and protect agricultural income from loss. Therefore, the higher the proportion of agricultural income, the greater the demand of farmers to buy agricultural insurance. The number of natural disasters that caused more than 20% loss of income in the past three years. This is the most significant of the seven factors. The farmers who have experienced natural disasters that have a serious impact on agricultural production, can more clearly understand the importance of agricultural insurance to them. The greater the risk faced by farmers, the stronger the willingness to spread the risk, and the stronger the willingness of farmers to buy agricultural insurance. Farmers’ understanding of agricultural insurance. The survey data show that this index has a significant impact on farmers’ agricultural insurance demand. During the on-the-spot visit, we also learned that farmers with a good understanding of agricultural insurance will also have some understanding of the defects such as high premiums, low compensation rates and cumbersome claims with respect to agricultural insurance. Therefore, it has a certain impact on farmers’ willingness to buy agricultural insurance, but on the whole, the more farmers know about agricultural insurance, the stronger their willingness to buy.

2.4.2Analysis of insignificant influencing factors. The area of contracted land. The area of land contracted by farmers is 666-4 000 m2. The area is not large, and the gap between each other is not big, so it is not very sensitive to the demand for agricultural insurance, and the willingness to buy agricultural insurance is not significant. The total annual income of farmers. Through the analysis of the sample data, it can be seen that the annual total income of farmers is evenly distributed at 10 000-40 000 yuan. The income of farmers with high annual income comes not only from agricultural production and operation, but also from other industries, and the proportion is not low. Therefore, the total household income of farmers has no significant impact on their demand for agricultural insurance. Farmers’ satisfaction with agricultural insurance products. Usually, the satisfaction with agricultural insurance products will directly affect whether consumers buy or not. However, only 21.7% of the farmers in Enshi Prefecture have purchased agricultural insurance, and these farmers will have a practical evaluation of the insurance products. Most other farmers do not buy, and do not understand the real value of agricultural insurance, and have low willingness to buy. Therefore, Enshi farmers’ satisfaction with agricultural insurance has no significant impact in the model analysis, mainly due to the overall lack of understanding of agricultural insurance.

3 Recommendations on strengthening farmers’ demand of agricultural insurance in poor mountainous areas

The demand for agricultural insurance has three features. (i) Farmers. Agricultural insurance provides risk protection for farmers’ agricultural production, and promotes farmers’ agricultural production and operation to achieve a long-term balance of income and expenditure. (ii) Government. Through agricultural insurance, government departments can solve the problem of farmers returning to poverty due to disasters, protect farmers’ income and promote the sustainable development of agriculture. (iii) Insurance companies. At the present stage, the competition in the urban insurance market is very fierce, and insurance companies need to innovate and expand the urban insurance market while further opening up and developing the rural agricultural insurance market[3]. It can be seen that doing a good job in agricultural insurance is of great significance to farmers, the government and insurance companies.

From the conclusion of qualitative and quantitative analysis of the implementation of agricultural insurance in Enshi Prefecture, we can see that farmers’ education level, the risk degree of agricultural production, the proportion of agricultural income, and the policy support of the government to agricultural insurance, insurance companies’ premiums, compensation rates, claims procedures, service quality and other factors will have an impact on farmers’ agricultural insurance demand. Therefore, in order to improve the enthusiasm and initiative of farmers to purchase agricultural insurance, it is necessary to put forward measures and suggestions from the perspectives of farmers, government and insurance companies.

3.1For farmers, first of all, with the help of local governments and financial and insurance institutions, they should actively participate in the training courses on basic knowledge of agricultural technology and agricultural insurance offered by counties, towns, villages and insurance companies to receive professional training and use the Internet, radio, television, mobile phones and other modern and convenient tools for regular self-learning. Through training and study, it is necessary to further master the knowledge of agricultural technology and improve the level of education. At the same time, it is necessary to deepen the understanding of the practical significance of agricultural insurance, understand the relevant national policies and regulations and insurance varieties, insurance methods, scope of responsibility, compensation standards and other basic knowledge, and enhance the demand and purchase desire of agricultural insurance[4]. Second, they should make full use of the poverty alleviation policies given by governments at all levels and the favorable conditions of supporting funds, while doing a good job in conventional agricultural production and operation. Individual households or joint households should innovate and develop small and micro family tourism-oriented agriculture or agricultural products processing industry, so as to improve the income level, enhance the ability to purchase agricultural insurance, and realize the demand for insurance.

3.2For government departments, one is to cooperate with insurance companies to carry out basic education on agricultural insurance for farmers by holding training courses in different forms and at different levels. It is necessary to make use of various media and public opinion tools to carry out extensive publicity to help farmers improve their understanding and awareness of agricultural insurance. Second, by increasing agricultural insurance subsidies, it is necessary to give more financial support to farmers and improve the purchasing power of agricultural insurance. Third, it is necessary to properly bear the premium burden of farmers. According to the request put forward by more farmers in the survey that the government should help pay the agricultural insurance premium, it is suggested that the government and farmers should share reasonably according to a certain proportion to appropriately reduce the insurance burden on farmers or introduce policies to appropriately reduce the premium, so as to encourage farmers to increase their willingness to buy agricultural insurance.

3.3For insurance companies, first, at present, they should fully understand and pay attention to the reality that the income level of farmers in poor areas is not high, and pay particular attention to insurance premiums, and formulate sectional premium charging standards according to the actual situation and needs of farmers. Second, it is necessary to design new insurance products in accordance with local conditions to make insurance services more targeted. The third is to make the insurance operation transparent, simple and improve the insurance efficiency; at the same time, the claim settlement procedure should be simple, open and fast. We can also emulate the method of creating a sunny government to achieve one-stop claims settlement procedures, so that farmers can complete all claims settlement procedures in one place. Fourth, it is necessary to improve the quality of the staff of insurance companies, improve the service attitude and the service level, enhance the attractiveness to farmers, and mobilize the enthusiasm of farmers to take out insurance.

2020 is the decisive year of the national fight against poverty. Xi Jinping, general secretary of the CPC Central Committee, pointed out that on the basis of getting rid of poverty, poor areas and households should be given support when they start to embark on the road of prosperity. Both the government and insurance companies must enhance farmers’ willingness to buy agricultural insurance, improve their purchasing ability and enthusiasm, in order to ensure the sustainable, rapid and stable development of agriculture in poor mountainous areas, and promote farmers to get rich. It is necessary to take it as an important measure to implement general secretary Xi Jinping’s instructions, so as to make it take root, blossom and bear fruit.