EVALUATION OF EFFECTS OF AGRICULTURAL INSURANCE SCHEME ON AGRICULTURAL PRODUCTION IN ONDO STATE

Abstract

This paper uses data from a survey of two hundred and fifty cattle keeping households in three cattle keeping systems; intensive, semi-intensive and extensive systems, to assess the contribution of non-market benefits of cattle to the competitiveness and survival of smallholder cattle systems in Kenya, from an agricultural development perspective. These benefits of cattle keeping are of special importance in developing countries, where livestock are closely linked to the social lives of farmers and livestock assume finance and insurance roles for households, since financial markets function poorly and opportunities for risk management through formal insurance are generally absent. A complete budget analysis of the cattle enterprise is undertaken to estimate the contribution of non-market benefits to the competitiveness of the smallholder cattle production systems. The results indicate that up to 50-70 percent of the benefits realized from the smallholder cattle systems are non-cash. Further analyses indicate that smallholder cattle production systems are relatively competitive and efficient in utilization of household production factors, when non-market benefits are taken into consideration. This is especially so for extensive systems which are non-market oriented. The paper concludes by emphasizing the importance of non-market roles of cattle in evaluations of smallholder cattle production systems since this will have a bearing on any policy related interventions whose target is households that are wholly or partially dependent on the livestock economy.