ESTIMATING THE WILLINGNESS OF FARMERS TO PAY FOR CATTLE BUSINESS INSURANCE PREMIUMS: A CASE STUDY IN TAKALAR REGENCY, INDONESIA

Abstract

In order to support farmers, the Indonesian government offers a livestock insurance program called the cattle business insurance (AUTS), which is subsidized by 80 percent. Farmers are responsible for paying the remaining amount, which totals IDR 40,000 per head per year. The objective of this research is to assess the extent to which farmers are willing to contribute to cattle business insurance premiums and to examine the factors that influence their willingness to do so in the village of Timbuseng, located in the Takalar Regency of South Sulawesi, Indonesia. A survey was conducted, targeting 74 households selected through cluster sampling. To determine the willingness of farmers to pay for cattle insurance premiums, we employed the contingent valuation method, and logistic regression was used to analyze the factors that affect this willingness. The independent variables considered in the analysis included age, number of family members, level of education, income, farming experience, and the amount that farmers are willing to contribute as insurance premiums. The study found that the average amount farmers are willing to pay for AUTS insurance premiums is IDR 32,940, which is lower than the government-set rate of about 17.65%, with a participation rate of 37.33%. Factors such as a farmer's age, income and farming experience influence a farmer's willingness to pay cattle farm insurance premiums. Farmers' decisions to pay insurance premiums lower than government-mandated rates may be due to their financial constraints and inability to afford higher premiums. These varying factors highlight the complexity of farmers’ decision-making and the need for customized insurance options that take into account their individual circumstances.

Keywords

• cattle
• income
• insurance
• logistic regression
• participation
• premium