Potential of Livestock TAKAFUL in Pakistan: An Empirical Investigation

Abstract

Livestock sector in Pakistan is among top countries in the production of animal and dairy product. The country has witnessed an increasing trend in milk production during the last 5 years particularly in Punjab province. There are numerous risks associated with livestock which threaten the viability of this important sector. Most important of these risks and uncertainties are natural disasters including flood, heavy rainfall, and earthquake etc. All these risks play important role in the productivity of livestock sector. Livestock insurance is one of the options to mitigate the potential impacts of such natural calamities. This study is designed to investigate the demand for livestock insurance in Punjab province of Pakistan. Three Tehsils from central Punjab namely Lahore, Kasur and Raiwind, were selected as universe of the study. A total of 250 dairy farmers were interviewed using a structured questionnaire during January to March 2015. Descriptive statistics and binary logistic regression were used to assess the potential demand for livestock TAKAFUL (Islamic Insurance) in the study area. The results point to the significance of number of animals, ratio of farm income to household income, desire to increase herd strength and livestock farm quality in respondents’ willingness to pay for livestock TAKAFUL. The findings urged provision of Shariah compliant product for farmers and training in livestock management