Author : Tran Manh Hai

Summary : The risks in the production of dairy cattle is a major problem faced by many farmers. One approach to reducing this risk is through dairy cattle insurance. In Vietnam, several agricultural insurance pilot programs have been recently introduced to farmers, but most have been unsuccessful. One major reason for the inefficient implementation of agricultural insurance was the inappropriate design of insurance schemes.

This study employed the choice experiment method to determine the design features of dairy cattle insurance preferred by dairy farmers and estimate the willingness to pay for specific features of dairy cattle insurance. The survey covered a random sample of 300 dairy-farming households in Ba Vi district of Hanoi. Results revealed that although dairy farmers were very much aware of the desired features, importance, and benefits of dairy cattle insurance, only 30% paid any attention to the current government's agricultural insurance program.

Results from choice experiment analysis showed that the features of dairy cattle insurance considered by level of importance by dairy farmers were the coverage level (number of diseases), the rate of compensation, the contract duration, and premium were highly preferred. Farmers were willing to pay from VND 1.98 million (US$85.4) to VND 5.22 million (US$225) per cow per year for dairy cattle insurance. The mean WTP level for a dairy cattle insurance scheme was VND 3.83 million (US$165) per cow per year. Results also revealed that age, education, experience, and dairy herd size were the factors affecting farmers' preferences for specific attributes of dairy cattle insurance.

The study recommended the following for the improvement and development of livestock insurance market: (1) develop various dairy cattle insurance schemes; (2) raise farmers' awareness of dairy cattle insurance; (3) broaden training courses on dairy cattle insurance and good dairy farming practices; (4) encourage farmers to enlarge the farm scale; and (5) strengthen the implementation of the current agricultural insurance policies.