WANYANA Corrections

UPTAKE AND UTILIZATION OF AGRICULTURAL INSURANCE IN UGANDA: A
STUDY OF SMALL SCALE FARMERS IN

WAKISO DISTRICT
WANYANA SARAH
2018/HD03/728U
A DISSERTATION SUBMITTED TO DEPARTMENT OF SOCIOLOGY AND

ANTHROPOLOGY IN THE PARTIAL FULFILLMENT OF THE REQUIREMENTS
FOR THE AWARD OF A MASTER’S OF ART (SOCIOLOGY)
DEGREE OF MAKERERE UNIVERSITY
FEBRUARY, 2022
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DECLARATIONI, Wanyana Sarah Reg No. 2018/HD03/728Udeclare that this dissertation
entitled “Uptake and utilization of agricultural insurance in Uganda: a study of small scale
farmers in Wakiso district” is my own original work and it has not been presented and will not be
presented to any other institution for any academic award. Where other people’s work has been
used, this has been duly acknowledged.
SIGN ……………………………………. DATE………………………………………

WANYANA SARAH
2018/HD03/728U
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APPROVAL
This is to certify that this dissertation by Wanyana Sarah Reg No. 2018/HD03/728U entitled,
“Uptake and utilization of agricultural insurance in Uganda: a study of small scale farmers in
Wakiso district” is submitted for examination with my approval as supervisor.
SIGN ……………………………………. DATE………………………………..

ASSOC PROF. ROBERT KABUMBULI
SUPERVISOR
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DEDICATION
This dissertation is dedicated to my family members most especially my Children, my Husband
and my Parents for their financial support and moral encouragement.
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ACKNOWLEDGEMENT
First and foremost, I want to thank the Almighty God who has been the source of wisdom and
finances to enable me to complete this course leading to the award of this higher degree
qualification to me.
I am deeply indebted to my research supervisor Assoc Prof. Robert Kabumbuli for his patience
with my inadequacies as he guided me through the research process. Without your parental and
professional input, this research would have been difficult to elevate to this current level.
My heartfelt gratitude goes to Dr. Chris Opesen, Makerere University, Department of Sociology
for mentorship who supported me all through to this day, he still inspires and encourages me
pursue further studies against all odds.
I acknowledge with gratitude the contributions and co-operation made by the respondents from
Wakiso district for their willingness to provide the necessary information during the research
process. Without their cooperation, this study would have been impossible to accomplish.
Thank you all and may God bless you abundantly
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TABLE OF CONTENTS
APPROVAL....................................................................................................................................i
DEDICATION................................................................................................................................i
ACKNOWLEDGEMENT............................................................................................................ii
TABLE OF CONTENTS.............................................................................................................iii
LIST OF TABLES.......................................................................................................................vii
LIST OF FIGURES....................................................................................................................viii
LIST OF ACRONYMS................................................................................................................ix
ABSTRACT..................................................................................................................................xi
CHAPTER ONE:INTRODUCTION...........................................................................................1
1.0 Background of the study............................................................................................................1
1.1 Introduction................................................................................................................................1
1.2 Statement of the Problem...........................................................................................................3
1.3 Purpose of the study...................................................................................................................3
1.3.1 Specific objective of the study................................................................................................3
1.4. Research questions....................................................................................................................4
1.5 Significance of the study...........................................................................................................4
1.6 Justification of the study............................................................................................................5
1.8 Scope of the study......................................................................................................................8
1.8.1 Geographical scope.................................................................................................................8
1.8.2 Content scope..........................................................................................................................8
1.9 Definition of key terms..............................................................................................................8
CHAPTER TWO:LITERATURE REVIEW............................................................................10
2.1 Introduction..............................................................................................................................10
2.2.2 Socio-economic factors influencing the usage of agriculture insurance by small scale
farmers...........................................................................................................................................15
2.2.3 The different stakeholders in implementation of agriculture insurance...............................17
2.2.4 The outcome of the uptake and utilization of agricultural insurance for the small scale
farmers...........................................................................................................................................20
2.3 Literature summary..................................................................................................................22
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CHAPTER THREE:RESEARCH METHODOLOGY...........................................................24
3.1 Introduction..............................................................................................................................24
3.2 Research Design......................................................................................................................24
3.3 Research approaches................................................................................................................24
3.3.1 Qualitative data.....................................................................................................................24
3.3.2 Quantitative data...................................................................................................................24
3.4 Study Area and study Population............................................................................................24
3.5 Sampling Technique and procedure........................................................................................25
3.5.1.1 Purposive Sampling...........................................................................................................25
3.5.2.1 Simple Random Sampling.................................................................................................25
3.6 Determination of the Sample Size and selection.....................................................................26
Table 3.1: Sample Size of Respondents........................................................................................26
3.7.1.1 The interview method........................................................................................................27
3.7.1.2. Documentary review.........................................................................................................27
3.7.2 Quantitative data...................................................................................................................27
3.8 Data Collection Instruments....................................................................................................27
3.8.1 Questionnaire........................................................................................................................27
3.8.2 Interview Guide....................................................................................................................28
3.8.3 Documentary review checklist.............................................................................................28
3.9 Reliability and Validity of the Research Instruments..............................................................28
3.9.1 Validity of the Instruments...................................................................................................28
3.9.2 Reliability of the Instruments...............................................................................................29
3.10 Procedure of Data Collection.................................................................................................30
3.11 Data analysis..........................................................................................................................30
3.11.1 Qualitative data analysis.....................................................................................................30
3.11.2 Quantitative data analysis...................................................................................................30
3.12 Ethical Considerations...........................................................................................................30
3.13 Limitations and challenges....................................................................................................31
CHAPTER FOUR:DATA PRESENTATION, ANALYSIS AND INTERPRETATION.....32
4.1 Introduction..............................................................................................................................32
4.2 Background characteristics of respondents.............................................................................32
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4.2.1 Gender of the respondents....................................................................................................32
4.2.2: Age of the respondents........................................................................................................33
4.2.3: Education level of respondents............................................................................................34
4.2.4: Marital status.......................................................................................................................34
4.2.5 Two main types of risks........................................................................................................35
4.2.6 Agricultural Insurance cover................................................................................................36
4.2.7 Main agricultural enterprise..................................................................................................37
4.2.8 Most important animal in your animal husbandry................................................................37
4.3.1 The awareness of small scale farmers about the existing agriculture insurance schemes....38
4.3.2 The socio-economic factors influence uptake and utilization of agriculture insurance by
small scale farmers........................................................................................................................41
4.3.3 The role of the different stakeholders in implementation of agricultural insurance Wakiso
district............................................................................................................................................44
farmers...........................................................................................................................................47
CHAPTER FIVE:SUMMMARY, DISCUSION, CONCLUSIONS AND
RECOMMENDATIONS............................................................................................................49
5.1 Introduction..............................................................................................................................49
5.2 Summary of key findings.........................................................................................................49
district............................................................................................................................................50
farmers...........................................................................................................................................50
5.3 Discussion of findings.............................................................................................................51
district............................................................................................................................................53
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farmers...........................................................................................................................................53
5.4 Conclusion...............................................................................................................................54
district............................................................................................................................................54
farmers...........................................................................................................................................55
5.5 Recommendations....................................................................................................................55
district............................................................................................................................................56
farmers...........................................................................................................................................57
5.6 Contributions of the study.......................................................................................................57
5.7 Limitations of the study...........................................................................................................58
5.8 Recommendations for Further Research.................................................................................58
REFERENCES............................................................................................................................59
APPENDICES.................................................................................................................................i
APPENDIX ONE: QUESTIONNAIRS FOR SMALL SCALE FARMERS............................i
APPENDIX TWO: STRUCTURED INTERVIEW SCHEDULE FOR AGENCIES,
PERSONNEL/STAKEHOLDERS DEALING WITH AGRICULTURE INSURANCE.......v
APPENDIX THREE: DOCUMENT REVIEW CHECKLIST...............................................vii
APPENDIX SIX: KREJCIE AND MORGAN TABLE..........................................................viii
LIST OF TABLES
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Table 3.1: Sample Size of Respondents........................................................................................26
Table 3.2: Results of content validity for research tools...............................................................29
Table 3.3: Reliability test results of research instruments.............................................................30
Table 4.4: Response Rate..............................................................................................................32
Table 4.5: Marital status of respondents........................................................................................36
Table 4.6: Two main types of risks...............................................................................................36
Table 4.7: Agricultural insurance cover........................................................................................37
Table4. 8: Most important animal in your animal husbandry.......................................................38
Table 4.9: knowledge of existing insurance schemes affects the use of agricultural insurance?. .39
Table 4.10: Correlation matrix for awareness of small scale farmers about the existing agriculture
insurance schemes.........................................................................................................................43
Table 4.11: The cost of insurance affects farmer’s use of agricultural insurance.........................43
Table 4.12: The education level among farmers affects farmer’s use of agricultural insurance...45
Table 4.13: The risks surrounding crops and livestock farming affects farmer’s use of
agricultural insurance.....................................................................................................................46
Table 3.14: Correlation matrix for the socio-economic factors and utilization of agriculture
insurance........................................................................................................................................48
Table 3.15: The farmer groups affect the uptake of Agriculture insurance cover in your Wakiso
district............................................................................................................................................48
Table 4.16: The private sector affects the uptake of Agriculture insurance cover in Wakiso
district............................................................................................................................................49
Table 4.17: The high costs of insurance premiums affect use of agriculture insurance among
Table 4.18: Correlation matrix for the role of the different stakeholders in implementation of
agricultural insurance Wakiso district...........................................................................................52
Table 4.19: The Uptake of agricultural insurance increases small scale farmer’s income............52
Table 4.20: The Uptake of agricultural insurance increases small scale farmer’s yields..............53
Table 4.21: Correlation Matrix for the outcome of the uptake and utilization of agricultural
insurance for the small scale farmers.............................................................................................54
LIST OF FIGURES
Figure 1.1: Uptake and Utilization of Agricultural Insurance.........................................................6
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Figure 4.2: Gender of respondents.................................................................................................33
Figure 4.3: Age of the Respondents..............................................................................................34
Figure 4.4: Highest Level of Education the Respondents.............................................................35
Figure 4.5: Main agricultural enterprise........................................................................................38
Figure 4.6: Channels of distribution increase farmer’s awareness about the use of agricultural
insurance........................................................................................................................................40
Figure 4.7: Channels you get your own agricultural insurance.....................................................41
Figure 4.8: Credit financing cost increase farmer’s awareness about the use of agricultural
insurance........................................................................................................................................42
Figure 4.9: The type of farming practiced (crop/livestock) affects farmer’s use of agricultural
insurance........................................................................................................................................44
Figure 4.10: Family income level affects farmer’s use of agricultural insurance.........................47
Figure 4.11: The long procedures in the acquisition of the policy affect use of agriculture
insurance........................................................................................................................................50
LIST OF ACRONYMS
EPRC: Economic Policy Research Centre
GDP: Gross Domestic Product
viii
MAAIF: Ministry of Agricultural, Animal Industry and Fisheries
NDP: National Development Plan
UAIS: Uganda Agriculture Insurance Scheme
UBOS: Uganda Bureau of Statistics
USAID: United States Agency for International Development
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ABSTRACT
The study investigated the uptake and utilization of agricultural insurance in Uganda, using small
scale farmers in Wakiso district as a case study. The study was guided by four research
objectives namely; to assess the awareness of small scale farmers about the existing agriculture
insurance scheme, to examine how socio-economic factors influence uptake and utilization of
agriculture insurance by small scale farmers, to examine the role of the different stakeholders in
implementation of agricultural insurance and to determine the outcome of the uptake and
utilization of agricultural insurance for the small scale farmers in Wakiso district. The study
adopted a cross sectional survey design where both quantitative and qualitative approaches were
used
In this study, out of the 144 questionnaires administered, 100 were returned correctly filled
representing 69%. Out of the 07 respondents that were targeted for key informant interviews,
only 05 were actually interviewed implying a response rate of 71%. The data were collected
using questionnaires and interviews, quantitative analysis was done using Pearson correlation
coefficients and qualitative analysis was done using content and thematic analysis.
The study found that awareness influences the use of Agriculture insurance among farmers in
Wakiso district. The study also found that socio-economic factors such as the cost of insurance,
type of farming practiced, risks surrounding crops and livestock and income generated from
farming influences the use of Agriculture Insurance. The study finally found that stakeholders
influence the use of Agriculture insurance throughinsurance through offering insurance at high
costs premiums, long procedures in the acquisition of the policy, delays in compensation in case
of loss, inadequate creation of awareness on the available policies and limited risk coverage by
the insurance firms. The study concluded that lack of awareness, socio-economic factors and
stakeholder related factors influences the uptake of Agriculture insurance among small scale
farmers in Wakiso district. It was recommended that more awareness should be created among
farmers on the benefits and the importance of use of Agriculture insurance. The study finally
recommends that another study to be done on the benefits of use of Agriculture insurance to
farmers which was not the focus of this study.
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CHAPTER ONE
INTRODUCTION
1.0 Background of the study

1.1 Introduction
Agricultural insurance has a long history: early insurance schemes were offered in Germany as
early as the late 1700s. By the late 19th century many European countries as well as the United
States had crop insurance schemes, mainly against hail. Government involvement started in the
late 1930s already in the United States when the federal crop insurance was first authorized in
Title V of the Agricultural Adjustment Act of 1938 (Mahul & Stutley, 2010). Starting in the
1950 agricultural insurance schemes was first set up in developing countries. Between the 1950s
and the 1980s a number of public sector Multi-Peril Crop Insurance (MPCI) schemes were
established in Latin America (for example, Brazil, Costa Rica, and Mexico) and Asia (for
example, India, the Philippines), often linked to seasonal production credit programs for small
farmers (Kerer, 2013).
Agriculture is the dominant sector in Sub-Saharan Africa as it accounts for a major share of key
economic indicators such as value of total exports, national Gross Domestic Product (GDP) and
employment hence it’s potential to spur growth and reduce poverty in Africa. In Kenya, the
sector is dominated by smallholder farmers who contribute over two-third of the total
agricultural output (Hohl, 2019). Despite agriculture being an important source of income growth
and a potential source of investment opportunities, inherent risks have been an integral part of
this sector. Rainfall variability and other weather-related hazards are an important component of
risk that confronts farmers due to high correlation that exist between climatic factors and
performance of agricultural sector. Given the over-dependence of smallholder farms on rain-fed
agriculture, climate variability and change is rapidly threatening sustained agricultural
productivity, food security as well as economic development (Mensah et al., 2017).
Agriculture is a vital sector of Uganda’s economy as source of employment for 70 percent of the
population. The sector also contributes 24% to the country’s GDP and 40 percent to export
earnings and is essential for ensuring sustainable food security. The sector remains the most
critical for Uganda to attain inclusive wealth creation and employment, and to achieve the 2040
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Vision of “Transforming Ugandan Society from a Peasant to a Modern and Prosperous Country
within 30 years”. While Uganda’s GDP per capita is US$ 788 at the present, the country aspires
to attain low-to-middle income status by 2020, with a GDP per capita of US$ 1,033 which
requires an annual growth of 6.3%.1 By 2040, Uganda aspires to attain a GDP per capita of US$
9,500, which requires the country to grow at 8.2 percent per annum during 2013-2040.
Uganda is currently experiencing climate variability. For example, the onset of rainy seasons has
been documented to shift by 15 to 30 days (earlier or later), while the length of the rainy season
can change by 20 to 40 days from one year to the next (USAID, 2013). Changing rainfall
patterns and intensities affect soil moisture, crop growth at different stages, and post-harvest
storage conditions. Crops such as coffee, rice, maize, bananas, and cassava are adversely affected
by climate variability (USAID, 2013), and yet, these are part of the twelve priority agricultural
enterprises identified in the National Development Plan (NDP) II for the country to achieve
long-term sustainable economic growth (NPA, 2015). The Government of Uganda recognizes
the risky nature of agriculture but acknowledges that the sector is critical for Uganda’s growth.
As such, the government is supporting a number of interventions to address climate variability.
One such venture is the Uganda Agriculture Insurance Scheme (UAIS). Started in FY 2016/17,
the government has piloted this scheme with the overarching objective of hedging farmers
against agricultural risks/natural disasters over which they have limited or no control.
Despite the importance of agricultural insurance in wealth and employment generation, the
sector is faced by many covariate risks, particularly those associated with adverse weather
changes. External shocks and weather variability result in negative financial outcomes for poor
households that depend on agriculture as their major source of livelihood (Nnadi et al., 2013);
limited awareness and sensitization; limited staff with the required technical competence to
adequately assess the risks facing farmers and advising them accordingly; high taxes on
insurance products (VAT and stamp duty); limited local capacity to collect adequate risk and loss
assessment data; and the constant premium subsidy allocated by government despite increasing
numbers of insured farmers and value insured, (Uganda Insurance Association, 2016). It’s
against this background that the study will examine the uptake and utilization of agricultural
insurance in Uganda, a study of small scale farmers in Wakiso district.
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1.2 Statement of the Problem
The Government of Uganda under Ministry of Finance with Public Private Partnership and the
Uganda Insurers Association has come up with various efforts to enhance utilization of
agricultural insurance which include; Agriculture Insurance Subsidy scheme, financial inclusion
and insurance for rural agricultural communities, market development of agricultural insurance,
providing subsidies for cost reduction, reinsuring risks and cooperation with private sector. All
these aim at bringing indirect benefits for the small scale farmers, which increases the client-
value. Indirect benefits include increasing access to credit, lower interest rates, higher credit
amounts, weather information, risk mitigation techniques, agriculture technical training, and
discounts (Agricultural Finance Year Book, 2019; MAAIF, 2019).
Despite the efforts, the uptake and utilization of this scheme has remained rather slow and
haphazard, for example, awareness about the agricultural insurance opportunities remains limited
for small-scale farmers, inadequate regulatory frameworks, weak supervision, lack of actuarial
expertise, lack of professional expertise in designing and monitoring agricultural insurance
products, dispersed clients, who may not be willing or able to pay actuarially sound premiums
for multiple peril products, and the tendency of governments to undermine market development
through inappropriate use of subsidies and disaster relief funds (EPRC, 2018; Carter et al., 2014).
It’s against this background that the study examined the uptake and utilization of agricultural
insurance in Uganda, using small scale farmers in Wakiso district as a case study.
1.3 Purpose of the study
The study investigated the uptake and utilization of agricultural insurance in Uganda, using small
scale farmers in Wakiso district as a case study
1.3.1 Specific objective of the study
i. To assess the awareness of small scale farmers about the existing agriculture insurance
schemes in Wakiso district.
ii. To examine how socio-economic factors influence uptake and utilization of agriculture
insurance by small scale farmers in Wakiso district.
iii. To examine the role of the different stakeholders in implementation of agricultural
insurance in Wakiso district.
iv. To determine the outcome of the uptake and utilization of agricultural insurance for the
small scale farmers in Wakiso district
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1.4. Research questions
i. To what extent are the farmers aware of the agriculture insurance in Wakiso district?
ii. What is the relationship between socio-economic factors and the uptake and utilization of
the agricultural insurance?
iii. What are the roles and influence of the key players in the adoption of agricultural
insurance?
iv. What are the outcomes of the adoption of agricultural insurance?
1.5 Significance of the study
The study will be of value to insurers to understand the importance of ensuring effective
insurance products in the agricultural sector is designed to ensure that farmers are fully covered
under all unforeseen perils hence reduce their losses and improve productivity. The
recommendations of this study will form part of the action plans that will help in enhancing good
service delivery by the insurance companies.
The regulators in the insurance sector will also find invaluable information on how to formulate
their regulatory policies that will guide agricultural insurance as a product and encourage other
firms within and without the industry in implementing agricultural insurance product. This is
more so on the basis of licensing insurance companies to distribute agricultural insurance
products to farmers.
For academicians, this study will form the foundation upon which other related and replicated
studies can be based on. Scholars will find it important as the study will increase to the body of
knowledge in this area. The study will be quite enriching to researchers, academic institutions
and scholars. This is because it will add to their knowledge and enable them to be more informed
when exploring the role of insurance industry in the farming sector thus make informed
decisions.
Also the study is important considering the inadequate disaster preparedness and response in the
country. There is low preparedness, response capacity and coping mechanisms in the event of
disasters such as drought, floods, fires, diseases and pests. Pests and diseases cause heavy losses
through deaths, reduced productivity and loss of markets for products. Crop pests and diseases
reduce yields substantially, sometimes by over 50% or even total crop failure. Livestock pests
and diseases also do affect livestock production and new diseases are emerging. These pests and
diseases are insurable under agriculture insurance as well as drought and floods.
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1.6 Justification of the study
Agriculture is a vital sector of Uganda’s economy as source of employment for 70% of the
population. The sector also contributes 24% to the country’s Gross Domestic Product (GDP) and
40 per cent to export earnings and is essential for ensuring sustainable food security. The sector
remains the most critical for Uganda to attain inclusive wealth creation and employment, and to
achieve the 2040 Vision of “Transforming Ugandan Society from a Peasant to a Modern and
Prosperous Country within 30 years” (UBOS Statistical Abstract, 2016).
Despite the importance of agricultural insurance in the country, the sector is faced by many risks,
particularly those associated with adverse weather changes. External shocks and weather
variability; limited awareness and sensitization; limited staff with the required technical
competence to adequately assess the risks facing farmers and advising them accordingly (Uganda
Insurance Association, 2016). Consequently, a study of this nature would not only add to the
existing canon of knowledge in agricultural insurance literature but also would provide Ministry
of Agriculture, Fisheries and Animal Industry information on the needs of this sector. In
addition, insurance companies would be able to develop agricultural insurance products tailor
made towards the needs of financial institutions and the farmers in the sector.
1.7 Theoretical / Conceptual Framework
1.7.1 Conceptual Framework
The conceptual framework summarizes the variables of the study as shown in Figure 1.1.
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Independent Variable (IV)
Uptake
Awareness of small scale

farmers
 Knowledge of insurance
products
 Attitude on insurance
products Dependent Variable (DV)
Socio-economic factors Utilization of Agricultural Insurance
 Farmer characteristics
 Crop Insurance
 Farm characteristics
 Insurance product  Area Yield Index Insurance
characteristics  Weather Index Insurance
 Livestock Insurance
Role of different stakeholders
 Insurance companies  Aquaculture insurance
 Private sector
 Farmer groups
Outcome of the uptake and

utilization
 Yields
 Income
 Markets
Figure 1.1: Uptake and Utilization of Agricultural Insurance

Source: (Carter et al., 2014; Agro Consortium Secretariat, 2020 and modified by the
researcher, 2021)
The conceptual framework above explains the relationship between Uptake and utilization of
agricultural insurance. The independent variable is uptake and dependent variable is utilization
of agricultural insurance. The independent variable is measured using the following subthemes;
awareness of small scale farmers (Knowledge of insurance products, Attitude on insurance
products), socio-economic factors (Farmer characteristics, Farm characteristics and Insurance
product characteristics), role of different stakeholders (Insurance companies, Private sector, and
farmer groups) and outcome of the uptake and utilization (Yields, Income, and Markets). The
dependent variable is measured in terms of Crop Insurance, Area Yield Index Insurance,
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Weather Index Insurance, Livestock Insurance and Aquaculture insurance. A change in the
independent variables brings a change in the utilization of agricultural insurance.
1.7.2 Theoretical framework
The study was guided by Everett Rogers Adoption of Innovation Theory developed in 1962, is
one of the oldest social science theories. It originated in communication to explain how, over
time, an idea or product gains momentum and diffuses (or spreads) through a specific population
or social system. The end result of this diffusion is that people, as part of a social system, adopt a
new idea, behavior, or product. Adoption means that a person does something differently than
what they had previously (for instance, purchase or use a new product, acquire and perform a
new behavior, among others). The key to adoption is that the person must perceive the idea,
behavior, or product as new or innovative. It is through this that diffusion is possible.
Adoption of a new idea, behavior, or product ("innovation") does not happen simultaneously in a
social system; rather it is a process whereby some people are more apt to adopt the innovation
than others. Researchers have found that people who adopt an innovation early have different
characteristics than people who adopt an innovation later. When promoting an innovation to a
target population, it is important to understand the characteristics of the target population that
will help or hinder adoption of the innovation. There are five established adopter categories, and
while the majority of the general population tends to fall in the middle categories, it is still
necessary to understand the characteristics of the target population. When promoting an
innovation, there are different strategies used to appeal to the different adopter categories.
Innovator: These are people who want to be the first to try the innovation. They are venturesome
and interested in new ideas. These people are very willing to take risks, and are often the first to
develop new ideas. Very little, if anything, needs to be done to appeal to this population.
Early Adopters: These are people who represent opinion leaders. They enjoy leadership roles,
and embrace change opportunities. They are already aware of the need to change and so are very
comfortable adopting new ideas. Strategies to appeal to this population include how-to manuals
and information sheets on implementation. They do not need information to convince them to
change.
Early Majority: These people are rarely leaders, but they do adopt new ideas before the average
person. That said, they typically need to see evidence that the innovation works before they are
7
willing to adopt it. Strategies to appeal to this population include success stories and evidence of
the innovation's effectiveness.
Late Majority: These people are skeptical of change, and will only adopt an innovation after it
has been tried by the majority. Strategies to appeal to this population include information on how
many other people have tried the innovation and have adopted it successfully.
Laggards: These people are bound by tradition and very conservative. They are very skeptical of
change and are the hardest group to bring on board. Strategies to appeal to this population
include statistics, fear appeals, and pressure from people in the other adopter groups.
This theory has been used successfully in many fields including communication, agriculture,
public health, criminal justice, social work, and marketing. In agriculture, Diffusion of
Innovation Theory was used accelerate the adoption of important agricultural programs like
insurance that typically aim to change the behavior of a social system. For example, an
intervention to address agricultural problem is developed, and the intervention is promoted to
people in a social system with the goal of adoption (based on Diffusion of Innovation Theory).
The most successful adoption of agricultural program results from understanding the target
population and the factors influencing their rate of adoption.
1.8 Scope of the study
1.8.1 Geographical scope
The study covered small scale farming households and insurance companies and limited to the
district boundaries of Wakiso district found in Central Uganda.
1.8.2 Content scope
The study focused on the awareness of small scale farmers about the existing agriculture
insurance schemes in Wakiso district, how socio-economic factors influence uptake and
utilization of agriculture insurance by small scale farmers, the role of the different stakeholders
in implementation of agricultural insurance and to determine the outcome of the uptake and
utilization of agricultural insurance for the small scale farmers in Wakiso district.
1.9 Definition of key terms
Uptake refers to the acceptance or adoption of a new product or idea. Agricultural insurance
uptake may therefore be described as, the acceptance or adoption of agricultural insurance by
8
farmers. Consequently, in determining the factors affecting uptake of agricultural insurance by
farmers, factors affecting the demand of agricultural insurance are considered.
Agriculture Insurance: Insurance applied to Agricultural enterprises, it includes crop insurance,
livestock insurance, aquaculture insurance and forestry, but normally excludes building and
equipment insurance although these may be insured by the same insurer under a different policy.
Nnadi et al. (2013) define agricultural insurance as the transfer of risk from one entity to another
in exchange for a premium.
Crop Insurance: Provides protection against loss or damage to growing crops including
perennial crops such as tree crops against specified or multiple perils, e.g. hail, windstorm, fire,
flood. Measurement of loss could be by “yield” basis, production costs basis, agreed value basis
or rehabilitation costs basis. While most crop insurance is geared towards loss of physical
production or yield, cover may also be provided to loss of the productive asset such as tree crops
(Mahul and Statley, 2010).
Livestock Insurance: This class of agriculture insurance generally centers on the provision of
mortality cover for livestock due to named disease(s), and accidental injury. Insurance cover is
normally restricted to adult animals and may be taken out on an individual animal or herd basis.
Major classes of insured livestock include beef and dairy cattle, sheep, goats and pigs and
domestic fowl.
Premium: The monetary consideration payable by the insured to the insurers for the period (or
term) of insurance granted by the policy.
Crop insurance is referred to as an indemnity that provides financial compensation for

production losses (Mahul and Statley, 2010). Besides reducing the uncertainty faced by the
insured, crop insurance also evens out the burden of potential production losses, especially those
of a large-scale nature. Part of the risk is transferred to an insurance company that in turn pays
the farmer compensation after the loss occurs.
Insurance can be defined as a financial mechanism that aims to reduce the uncertainty of loss by
pooling a large number of uncertainties so that the burden of loss is distributed (Mahul and
Stutley, 2010; Tsikirayi et al, 2012).
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CHAPTER TWO
LITERATURE REVIEW
2.1 Introduction
This chapter presents a review of related literature about uptake and utilization of agricultural
insurance based on studies by various academicians and writers. Therefore, the study presented
some gaps that were identified to justify the present study. Literature was reviewed according to
the study objectives.
.2 Types of agricultural insurance
Crop insurance which is classified in two major groups:
(i) indemnity-based insurance and (ii) index insurance. Indemnity-based insurance, also called
peril crop insurance, is composed of two main indemnity products, i.e., damage-based indemnity
insurance (peril crop insurance) and yield crop insurance. Damage-based indemnity insurance is
a type of crop insurance in which the premium is calculated by measuring the extent to which a
field has been damaged (in terms of percentage of crop damaged) soon after the damage has
occurred (World Bank, 2019). It is best known for protecting against damage from hail, but can
also be used for other perils such as frost and excessive rain. Damage-based indemnity insurance
is the most common type of agricultural insurance provided in developed countries (Wairimu et
al., 2016)
Index-based crop insurance consists of two types of index products: Area-Yield Index Insurance
and Weather-Index Insurance (Khandker et al. (2010). Area-Yield Index Insurance provides an
indemnity based on the realized average yield of an area, which can be a country or a district.
The amount of the insured yield is computed as a percentage of the average yield for the area. An
indemnity is paid if the realized yield for the area is less than the insured yield regardless of the
actual yield on a policy holder’s farm (Jensen et al., 2015). Area-yield index insurance requires
historical area yield data and it is mostly used in developing countries.
With regard to Weather-Index Insurance, the indemnity is based on the realizations of a specific
weather parameter over a pre-specified period of time at a particular weather station (World
Bank, 2019). Weather-index insurance measures a specific weather variable for a particular crop
based on historical data. Furthermore, it specifies a threshold and a limit for making payouts.
This type of insurance can be used to protect against either excessive rain or too little (Khandker
et al., 2010). An indemnity is paid when the realized value of the predetermined weather variable
10
exceeds a pre-specified threshold. The indemnity is calculated based on a pre-agreed sum insured
per unit of the index (World Bank, 2018).
Livestock and Aquaculture Insurance Products and Services Livestock and Poultry Policies: The
UAIS is currently offering standard individual animal mortality insurance for livestock and
poultry producers. In the case of cattle and pigs, the insurance cover is an individual animal
accident and mortality policy with a minimum of one animal insured, but for poultry it operates
as a whole-flock policy with a minimum of 500 insured birds. The Livestock policy wording
contains a specific clause for banks and/or financial institutions to cover situations where the
insured has taken out a loan to purchase one or more animals; the clause enables the financial
institution to claim its own rights and interests (i.e., the outstanding value of the livestock loan)
in the event of the animals’ death (Agro Consortium Secretariat (ACS), 2020).
Aquaculture Policy: The UAIS aquaculture insurance policy insures against the loss of fish
stock; based on an aquaculture policy wording designed by international reinsurers, it covers
both on-shore and off-shore fish farms. The fish stock policy insures against the loss/death of
fish stock reared in on-shore tanks, ponds, or raceways; off-shore fish reared in floating cages in
the sea; and grow-out operations and hatcheries. Cover does not extend to loss or damage of the
installations and equipment. The aquaculture policy protects against the death or loss of the fish
stock due to a wide range of named perils. Aquaculture insurance is an extremely specialized
class of livestock insurance, and it is highly dependent on the maintenance of very high sanitary,
husbandry, and management standards that can usually be met only by large-scale commercial
fish-farming enterprises. The UAIS product that has been launched by the Agriculture Insurance
Consortium is designed for large-scale commercial operators as opposed to small-scale family-
operated ponds, and is being offered only to the former (MAAIF and UBOS, 2019).
Kungula Crop Indexed Insurance was designed to protect crop and livestock producers against
drought and excess rainfall affecting crops and pasture. It used a composite index based on (i)
rainfall as measured by the nearest weather station, and (ii) remote sensing satellite data
collected by the Dutch Environmental Monitoring Company EARS (Environmental Analysis &
Remote Sensing). The crop policy was designed as a stand-alone product or linked to bank loans.
The product was targeted at farmer associations or individual farmers growing a minimum of
five acres of the insured crops (maize and beans); the sum insured was based on a pre-agreed
11
value or linked to the value of the loan; and the premium rates varied between 2% and 5%
according to the risk zone.
2.2.1 The awareness level of the existing agriculture insurance schemes by small scale
farmers. Suresh Kumar et al (2010) analyzed the farmer’s perception and awareness towards
crop insurance as a tool for risk management in Tamilnadu. The study critically examined how
the farmers perceive about the risk mitigation measures provided by the Government and about
their awareness. The study employed on Probit and Tobit model to analyze the awareness on
crop insurance schemes. This study also observed the loss assessment, which is totally
unacceptable and unpleasant to the farmers. The loss due to natural calamities is taken into
account at Firkah level and the individual losses are not at all considered. It concluded that the
factors such as gross cropped area, income other than agricultural source, presence of risk in
farming number of workers in the farm family, satisfaction with the premium rate and the
affordability of the insurance premium amount fount to be significantly and positively influence
the adoption of insurance and premium paid by the farmers.
Delivery channels, As insurers normally have limited or no business (or o ffices) in rural areas,
distribution is best organized through existing links to farmers or farmer groups (Dick et al.,
2011). The insurance product distribution through existing services or networks operating in
rural areas is important to increase coverage, reduce transaction costs, and reach more clients.
Complementary support for agricultural insurance operations could include the promotion of
“aggregators”; that is, farmers associations, cooperatives, producer associations, rural banks, and
microfinance institutions as delivery channels for agricultural insurance (World Bank, 2010). For
instance in Kenya, Kilimo Salama insurance is distributed using local stockiest at the time of
purchasing inputs, making it easier for the customer to adopt the new product. This distribution
channel capitalizes on existing relationships since farmers are more likely to take advice from
someone they know and trust (Kilimo Salama, 2011). Dercon et al. (2014) and Tadesse et al.
(2015) found the uptake of weather index insurance higher in Ethiopia when insurance is
channeled through group-based informal insurance schemes iddir (a funeral society in Ethiopia)
with appropriate training for group leaders.
Based on the human capital theorywhich uses education a proxy, several studies have established
a correlation between education and insurance uptake, for instance Chankova et al. (2018)
reports of positive correlation between health insurance uptake and education of the household
12
head. Brugiavani and Pace (2011) found literacy to be a determinant of health insurance
enrolment. According to Raju and Chand (2018), level of education, did not show any significant
influence on insurance uptake in India. Sherrick et al. (2014) reported that insurance users in
general, and revenue insurance users in particular, are expected to be more experienced and
better educated, indicating a greater responsiveness of insurance use to modern, more
sophisticated approaches to risk management. Such attributes may lead to greater precision in
risk assessments and to possible changes in risk attitudes that complement improved risk
carrying capacities. The lack of skill can increase their fear of the risks inherent in agricultural
production and consequently their needs to resort to risk management strategies (Ben-Houassa,
2010). Furthermore, it is generally hypothesized that producers with higher education tend to
adopt more sophisticated risk management tools.
Most rural farmers are not only illiterate but also unaware of new technologies such as insurance.
An assessment in Wakiso district found that 49 percent had never heard of insurance, 41 percent
did not know how it worked, and 25 percent did not know where to find it (World Bank, 2018).
More educated farmers and pastoralists portray higher demand and the less educated portray
lower demand (Bishu et al., 2018). Literacy is not only important in order to know about
insurance but also to correctly understand insurance contracts.
When farmers are not able to understand concepts like basis risk, demand remains low (Stoeffler
& Opuz, 2020). Education and information tend to run concurrently. While insurance providers
might not change the literacy skills of the farmers, they can provide more information. The
evidence shows that where information has been provided, farmers and pastoralists increase their
understanding of insurance as well as demand (Ali et al., 2020). Information might be provided
through games (Vasilaky et al., 2019), information brochures (Takahashi et al., 2016), or training
sessions (Dercon et al., 2014). However, it is not merely information or literacy, but a better
understanding of insurance concepts and underlying mechanisms that is crucial. While farmers
might know more about insurance, demand does not seem to improve with knowledge
automatically (Takahashi et al., 2016). Exposure needs to be consistent to nudge demand.
Previous experience also matters in that farmers who have previously insured are more informed
and hence more likely to purchase insurance again (Belissa et al., 2019). Insurance providers
13
could therefore invest in increasing insurance awareness through more marketing campaigns and
training.
Education, knowledge and information; Most rural farmers are not only illiterate but also
unaware of new technologies such as insurance. An assessment in Ethiopia found that 49 per
cent had never heard of insurance, 41 per cent did not know how it worked, and 25 per cent did
not know where to find it (World Bank, 2018). More educated farmers and pastoralists portray
higher demand and the less educated portray lower demand (Giné and Yang, 2009; Patt et al.,
2009; Hill et al., 2013; Bogale, 2015; Okoffo et al., 2016; Takahashi et al., 2016; Abugri et al.,
2017; Bishu et al., 2018; Fonta et al., 2018; Amare et al., 2019; Janzen and Carter, 2019;
Vasilaky et al., 2019). Literacy is not only important in order to know about insurance but also to
correctly understand insurance contracts. When farmers are not able to understand concepts like
basis risk, demand remains low (Stoeffler and Opuz, 2020).
Education and information tend to run concurrently. While insurance providers might not change
the literacy skills of the farmers, they can provide more information. The evidence shows that
where information has been provided, farmers and pastoralists increase their understanding of
insurance as well as demand (Patt et al., 2009; Lybbert et al., 2010; McPeak et al., 2010;
Takahashi et al., 2016; Belissa et al., 2019; Vasilaky et al., 2019; Ali et al., 2020a). Information
might be provided through games (McPeak et al., 2010; Vasilaky et al., 2019), information
brochures (Takahashi et al., 2016), or training sessions (Dercon et al., 2014). However, it is not
merely information or literacy, but a better understanding of insurance concepts and underlying
mechanisms that is is crucial.
While farmers might know more about insurance, demand does not seem to improve with
knowledge automatically (Takahashi et al., 2016). Exposure needs to be consistent to nudge
demand. Previous experience also matters in that farmers who have previously insured are more
informed and hence more likely to purchase insurance again (Karlan et al., 2014; Castellani and
Viganò, 2017; Belissa et al., 2019). Insurance providers could therefore invest in increasing
insurance awareness through more marketing campaigns and training
14
2.2.2 Socio-economic factors influencing the usage of agriculture insurance by small scale
farmers
Premium rates: Own price factor is the premium or price that the farmer pays monthly or as a
once off annual payment for the insurance policy for a given level of coverage or indemnity. A
high premium, relative to low coverage, would reduce demand for a particular policy and
conversely, a low premium, relative to high coverage, will increase uptake. Availability of
substitutes refers to the ease of access and the costs and returns available from other agricultural
risk management alternatives such as diversification of farm activities or cooperatives. Income
factor includes the level of income from the farm and off-farm activities. The higher the level of
on-farm income, the more the need for agricultural insurance to protect against income loss,
whereas the existence of off-farm income may be taken as a form of diversification and a risk
management tool, thus may act to reduce the demand for agricultural insurance. Consumer
expectations about future prices or income in the form of yield forecasts, revenue forecasts,
drought forecasts and its expected effects, expected return from insurance [(expected indemnity-
premium)/premium] and probability of receiving claim payment, may act to determine the level
of agricultural insurance uptake (Arshad et al. 2015).
Expected yield: The expected yield may be assessed by asking the farmers about their subjective
perception about the yield level (Shaik et al., 2018). Shaik et al., (2018) find that farmers that
perceive a high level of expected yield are less willing to purchase crop insurance. The
differences in expected yield may indicate variations in soil quality and management skills
(Barry et al., 2017). Farmers with high expected yield also have a higher expected income.
Differences in these factors may indicate differences in yield risk, which may affect insurance
use. Perceived yield risk: The farmers have a greater risk to be subjected of negative weather,
pests or deceases (World Bank, 2019). Farmers that perceived a higher level of yield risk are also
more willing to purchase crop insurance (Shaik et al., 2018). In this case, it is also interesting to
examine which factors/risks that affect production risk the most (World Bank, 2017)
Income: Several authors including Bierer and Eling (2012) report that high premium is a major
impediment to micro insurance uptake. Brouwer et al., (2016) reveal a positive relation between
willingness to pay (WTP) for flood protection through the construction of an embankment and
average annual household income, which suggests that higher income households are willing to
spend more money (i.e. pay a higher flood protection premium) to protect themselves against
15
flood damage risk in Bangladesh. Akter and Brouwer (2016) found out that the two most
common reasons for not buying an insurance scheme in principle are ‘limited financial income
and ‘disliking of terms and conditions of proposed flood insurance scheme.
Education: Based on the human capital theory which uses education a proxy, several studies
have established a correlation between education and insurance uptake, for instance Chankova et
al. (2018) reports of positive correlation between health insurance uptake and education of the
household head. According to Raju and Chand (2018), level of education, did not show any
significant influence on insurance uptake in India. Njue et al. (2018) reported that insurance
users in general, and revenue insurance users in particular, are expected to be more experienced
and better educated, indicating a greater responsiveness of insurance use to modern, more
production and consequently their needs to resort to risk management strategies (Lin et al.,
2015).
Perception, awareness and Knowledge of Insurance, Gine et al. (2018) strikingly show that the
most frequently cited reason amongst non-purchasers is that the consumer does not understand
the insurance product, representing 25% of weighted responses. The results suggest a significant
proportion of households who purchase insurance do so on the advice of trusted farmers or
village leaders; conversely 25% of explanations for non-purchase cite a lack of understanding of
the product. Atim and Sock (2017), identify community perception as the cause of the low
uptake of health insurance.
Tenure: Ownership and leasing of farmland often reflects greater wealth positions of farmers and
greater stability of land control. Other studies have shown that the greater wealth and less tenure
risk also reflect stronger risk bearing capacities and greater reliance on self-insurance relative to
commercial insurance. Hence a high ratio of owned acres to total acres operated normally reflect
nonuse of insurance and a greater preference for specificity in type of insurance product (Kong et
al., 2017). Aidoo et al. (2014) noted that crop insurance demand varies significantly across
agricultural land ownership in Bangladesh. They noted that Landowners are significantly more
willing to buy crop insurance scheme than landless farmers. Furthermore, they found out that the
demand for crop insurance varies significantly across the size of farmlands.
16
Farm Size: In general, larger sizes reflect greater managerial capacities and perhaps economies
of scale and scope in the utilization of various risk management practices. Farm size and crop
income, were significantly higher for insurers household as compared to non-insurers. Insurance
users are expected to operate larger acreages and to have intentions for further acreage
expansions (Aidoo et al., 2014). Osipenko et al., (2015) noted that insurance is positively linked
to the size of the farm, whether agricultural (cultivated area) or financial (total assets), which is
in line with literature.
2.2.3 The different stakeholders in implementation of agriculture insurance
Smith and Glauber (2012) report that insurance policies offered in developed countries fall into
the following three broad categories: specific/named perils, multiple peril/all-risk products and
index-based products. Specific-peril products provide protection against farm losses caused by
clearly specified perils such as drought and hail. Multiple-peril products provide coverage
against farm crop losses from many perils, as opposed to a small, clearly specified set of perils.
Index-based insurance products are essentially derivatives that farmers can use to insure their
crops against shortfalls in a weather-based, satellite-based, area (county) yield or a plant-growth
index.
In developing countries, several governments have tried to promote crop insurance and other
types of agricultural insurance by providing agricultural premium subsidies. This has made them
move from small-scale pilot programs to large-scale agricultural insurance programmes. In
China, with the support of the provincial and central government, the agricultural insurance
market in the country was able to grow dramatically, to become the second largest market after
the United States, in the year 2008 (Mahul and Stutley, 2010). In the Philippines, agricultural
insurance has been available for decades and multiple-peril crop insurance has been subsidized
by the government to provide cover for crops such as rice and corn. According to Bangsal
(2012), when farmers access agricultural credit from the Land Bank of the Philippines, it is
compulsory for them to have crop insurance. Shashi Kiran and Umesh (2012) report that in
India, the national agricultural insurance scheme provides cover a range of crops. This insurance
scheme is compulsory for farmers who have loans and is voluntary for other farmers. Since
2003, weather index-based insurance has been adopted in India in a number of states and is
subsidized by the government.
17
Makki and Somwaru (2001) found that insurance product choices are highly influenced by the
cost of insurance, level of risk and premium subsidies. Farmers with high-yield risks were more
likely to prefer revenue insurance contracts and higher coverage levels. Olila (2014) assessed
maize farmers’ preferences for crop insurance in Kenya. The study found that farmers preferred
higher coverage levels. Hence, an increase in coverage levels motivated the farmers’ preference
for crop insurance. Farmers had a negative preference for the cost feature of crop insurance: this
implies that an increase in premiums led to a lower preference for crop insurance. Farmers had a
higher preference for receiving compensation in the event of a yield loss. Farmers also preferred
being involved in the process of designing crop insurance programmes and had a higher
preference for the multiple-peril risk cover over the single-peril cover. This group also had a
higher preference for insuring against crop and market risks and crop and medical insurance
cover. In general, farmers preferred a bottom-up approach to crop insurance, one which involved
stakeholder engagement.
Aidoo et al. (2014) investigated crop insurance as a risk management tool among Ghanaian
arable crop farmers. The study identified the critical factors that influence the premiums farmers
are willing to pay towards the insurance scheme: it revealed that the most of the farmers were
interested in purchasing crop insurance and the factors that influenced their 24 decisions were the
land tenure system, the age of the farmer and the farmer’s education level. The study further
revealed that a government subsidy was required, since farmers had a preference for low
premiums, which were not feasible from the perspective of private insurance providers.
Enjolras et al. (2012) analyzed the demand for crop insurance in Italy and France. The study
revealed that the farmers’ decision to purchase crop insurance is influenced by the farmers’
aversion to risk, as well as the intrinsic characteristics and the performance of their own
agricultural enterprises. The study revealed an increase in premium levels in Italy as compared to
France, because there were public subsidies offered in France for policies in which catastrophic
risks were included. Without that kind of intervention, insurance tends to be more costly and less
profitable. Shashi Kiran and Umesh (2015) found that Indian maize farmers were not aware of
the products and procedures of crop insurance and this contributed to the limited demand for
crop insurance. The inability of farmers to assess the benefits of crop insurance is certainly one
of the reasons for a limited demand for it (Gamdo & Zilberman, 2018).
18
Ghazanfar et al. (2015) investigated the factors that influence farmers’ decisions to participate
and purchase crop insurance in Pakistan. Their findings revealed that the majority of farmers
were interested in purchasing crop insurance but that there was still a large number of farmers
who showed no interest in it. Their findings also indicated that low literacy rates and little
awareness of the expected benefits of crop insurance might be the reasons why farmers were
refusing to accept it. Farmers with more loss experience were more interested in purchasing crop
insurance because they felt insecure about their future yield. They felt that it was far better to
have crop insurance to avoid losses from future climatic hazards.
Balmalssaka et al. (2015) studied the maize farmers’ interest in participating in the crop
drought-index market for insurance in Ghana. The study revealed that education, access to credit
and farmers’ experience of other forms of insurance were the most significant factors that
determined the farmers’ interest in purchasing crop insurance. Damage incurred due to drought
increased the probability of farmers purchasing crop insurance. The past disaster event return
period and the number of non-farm income sources reduced the likelihood of farmers to make
the decision to purchase crop insurance. To enhance farmers’ purchasing of crop insurance, there
is a great need to integrate crop insurance into micro-finance.
Koume and Komenan (2012) reported that among Ivorian cocoa farmers, the age of the farmer,
their farming experience, household size, farm income and farm size had a significant influence
on a farmer’s interest in purchasing crop insurance. Danso-Abbeam et al. (2014) emphasized the
need to educate farmers about the importance of crop insurance. Linking agricultural insurance
with other products can enhance the demand for crop insurance and lead to the successful
adoption of agricultural insurance. Linking agricultural insurance with other financial services
such as credit is beneficial to farmers because it provides them with capital to purchase insurance
premiums and hence reduce the use of scarce resources to finance risk cover. Mahul and Stutley
(2010) reported that this approach has the benefit of reaching a larger number of clients because
it provides a package with more than one product. This finding strongly suggests that an increase
in the future demand for crop insurance may be achieved through the design of more attractive
crop insurance products (Goodwin et al., 2017)
To increase insurance acceptability, farmer-driven product design should be fostered and

prioritized, especially at early design stages (Greatrex et al., 2015). Patt et al. (2009) provided
19
two examples of participation that increased trust. In Ethiopia, farmers and experts worked
together using local materials to assemble historical rainfall distribution data of the area. Farmer
provided information was found to highly correlate with historical meteorological data, and
insurance experts, therefore, used it to calculate the monthly weights for rainfall in these areas.
The second example was in Malawi where through farmer workshops, farmers participated in
calculating the payout levels under different rainfall regimes, increasing both their understanding
and building trust in the products. Leblois et al. (2014) gave another dimension of farmer
participation. They compared an index constructed with a simulated cotton sowing date with that
provided by the farmers, collected through a farmer association. They found that the index that
used farmer-provided sowing date data was preferred and also reduced basis risk more than the
simulation-based product. Indeed, in their example, it was easy to access this farmer provided
data. However, it might be at a cost to insurance providers in the absence of such a farmer
organization that records this kind of data. The evolving picture-based insurance in Ethiopia
(Porter et al., 2020) and Kenya (ACRE Africa 2020) improves farmer participation in monitoring
and loss verification. It is, therefore, able to contribute to reducing basis risk as well as
increasing farmer trust through their participation.
farmers
Crop insurance is one instrument where participant farmers pay premiums and receive claims in
cases of losses against insured events (Rao et al., 2006), so that they are compensated for crop-
yield losses through payment of an indemnity. Farmers are then able to manage fluctuations in
revenue caused by both price and yield volatility. The payouts they receive help them in
consumption smoothing and to prevent the potential sale of assets. In developing countries, not
only are crop insurance programs in place to provide cover against potential losses but also to
promote other farm goals such as improving farmer’s access to credit, promoting the production
of high-quality crops and providing more stability in the agricultural sector, which enables
farmers to invest in riskier but potentially more productive activities (FAO, 2016).
Agriculture is the source of income and food security for most farmers in developing countries.
The main objective of a farmer is to increase his farm income and to reduce its variability.
According to Riwthong et al. (2016), farmers are mainly concerned with income variability and
20
income stability is not necessarily brought about by price stabilization. Higher profits are usually
associated with higher risks and it is important to manage risks effectively. It has been illustrated
that, in order to succeed, farmers need to generate more profit and be more competitive (FAO,
2016). Appropriate risk management is more effective and better farming opportunities occur
when farmers have a clear understanding of the farming environment and when they are aware of
potential problems and know how to decrease their effects.
A major challenge with bolstering demand for agricultural insurance is farmers’ budget
constraints. The prospective market for insurance is therefore divided into those with higher
incomes demanding more insurance and those with lower incomes who cannot afford it (Bishu et
al). Moreover, weather shocks in previous periods reduce farmers’ future income and demand.
Conventionally, as farmers’ incomes improve, so does their demand for insurance. Agriculture
income is, in particular, predictive of insurance demand (Abugri et al., 2017). However, as
households’ incomes improve, so does the likelihood to move out of agriculture and therefore
income diversification tend to dampen demand (Bogale, 2015). To increase demand, we
highlight two avenues below that might increase demand through income-based interventions.
However, simply choosing between cash and insurance might reveal immediacy biases rather
than effective long-term protection and poverty reduction potential (Delavallade et al., 2015).
The evidence indicates that while farmers might prefer cash, agricultural insurance provides
better opportunities for long-term poverty reduction and disaster management. In a simulation
study, Carter and Janzen (2018) showed that enabling farmers to be insured dominated other
social protection instruments such as cash transfers. By testing a multi-generational household
model of consumption, accumulation and risk management, they found that a 50 percent increase
in premium subsidies propped up insurance and slowed both the poverty rate and poverty depth,
leading to a 20 percent increase in GDP growth. Jensen et al. (2017) also found that subsidy-
supported insurance was overall more poverty averting compared to cash transfers. While cash
transfers improved short-term health measures, insurance increased investments in productive
assets, reduced livestock sales and increased adult equivalent income (Jensen et al., , 2017).
Finally, Janzen et al. (2020), in another simulation study spanning over 50 years of data in Kenya
and Ethiopia, showed that insurance not only had higher vulnerability reduction potential but
also brought additional investment incentive potential. They found that with insurance, farmers
21
could contribute to their social protection, hence reducing the overall costs of protection and
reaching wider coverage.
Alternatively, insurance providers can offer flexible premium payment mechanisms, which relax
budget limitations without affecting premiums. Namely: flexible time of payment, and labor-
based payments. In conventional insurance of all kinds, premiums are paid before coverage
begins. For rural farming households, agricultural insurance premiums would have to be paid
before the cropping season. However, at such times, smallholder farmers’ budgets are limited
due to other necessary expenditures such as farm inputs and extension services. Insurance ends
up being at the bottom of their priorities list (Binswanger-Mkhize, 2012). One avenue of easing
farmer budgets is by making flexible the time of payment. Casaburi and Willis (2018) tested a
pay-at-harvest insurance product with smallholder sugarcane contract growers in Kenya. In their
experiment, they found first that farmers demanded less insurance at the beginning of the season,
not due to liquidity challenges but because paying upfront was not marginal appropriate for their
expected return. Secondly, when farmers had the option of paying premiums after harvest,
demand increased from 5 per cent in the pay-up-front option to 72 per cent in pay-at-harvest
option. In a related study in Ethiopia, Belissa et al. (2019) found that when farmers had a pay-at-
harvest option, demand increased from 8 per cent to 24 per cent. However, the main challenge
with pay-at-harvest insurance products might be contract enforcement as default rates might be
high. Contract enforcement might not have been an issue in the Casaburi and Willis (2018) study
because they worked with contract farmers. These do not represent the average rural farmer. It is
therefore essential for providers to consider default and contract enforcement for average
smallholders.
2.3 Literature summary
The concept of agricultural insurance is not popular in Africa except among the large-scale
farmers although in the recent years, crops insurance has emerged as an important policy tool for
enhancing household resilience against climatic risks. Whilst globally there is a vast body of
literature that seeks to understand patterns and structure of crop insurance with respect to
behavior of the farmers under risk and their attitude, embedded information asymmetry problems
such as moral hazard and adverse selection and the likely outcomes on household welfare,
existing literature has been seriously biased towards indemnity-based insurance products.
Nonetheless, recent innovations in the derivative financial intermediaries have seen a remarkable
22
evolution of index insurance products in developing countries, but very little has been
documented with regard to the quality of indexed products (Jensen et al., 2014). Furthermore,
even with numerous efforts to avail formal insurance to farmers in low income rural settings
through pilot programs, to date, very little success has been achieved to move index insurance
beyond the piloting phase (Cole et al., 2012) hence the uptake levels remains low.
Factors that affect uptake of crop insurance are yet to be fully understood partly because of lack
of sufficient data and over-reliance on hypothetical evidence that seem to underscore theoretical
viability of crop insurance yet the empirical evidence from pilot programs show mixed results on
performance of agricultural insurance. Previous studies (Takahashi et al., 2014) have looked at
determinants of crop uptake decision such as price of the insurance, knowledge of the farmers,
resource endowment and rights but these studies tend to imply that insurance uptake is a binary
mechanism yet there is an incremental feature that defines the intensity of uptake. Nonetheless,
uptake of crop insurance draws heavily from the conventional technology adoption literature
whereby the existing evidence highlight the importance role of availability and affordability of
agricultural technologies and the expected benefits of adoption (Kasirye, 2013) in stimulating
farmer response.
23
CHAPTER THREE
RESEARCH METHODOLOGY
3.1 Introduction
This section presents key methodological steps and procedures that were followed to conduct
this study. The areas covered include research design, study area, study population, sample size
and selection, sampling techniques and its procedures, data collection methods, data collection
instruments, data management and analysis, and measurement of variables.
3.2 Research Design
A cross sectional survey design was used for the study as it gathered data from the sample
population at any particular time and permitted collection of information from a sample that is
drawn from a predetermined population. Both qualitative and quantitative approaches were used.
Qualitative method involved in-depth probing and application of subjectively interpreted data
(Saunders & Lewis, 2018). Qualitative research enabled the researcher to gather in-depth
information about the study, for example unstructured qualitative interviews served this purpose.
Bougie, (2016) states that quantitative methods are plans for carrying out research oriented
towards quantification and are applied in order to describe current conditions or to investigate
relationships, including cause and effect relationships. Furthermore, quantitative tools such as
questionnaires were used to generate the empirical statistical data for analyzing the relationship
between two variables (Bougie, 2016).
3.3 Research approaches
3.3.1 Qualitative data
Qualitative data involved in-depth probing and application of subjectively interpreted data
enabled the researcher to gather in-depth information about the study, for example unstructured
interviews served this purpose. This data was analyzed using content analysis and creation of
themes basing on study objectives.
3.3.2 Quantitative data
Quantitative data was based on numerical data and questioning method was used to collect that
data for analysis.
24
3.4 Study Area and study Population
Wakiso District is a district in the Central Region of Uganda that partly encircles Kampala,
Uganda's Capital City. The town of Wakiso is the site of the district headquarters. Kira, the
country's second largest city and suburb of Kampala, is in the district. Wakiso District lies in the
Central Region of the country, bordering with Nakaseke District and Luweero District to the
north, Mukono District to the east, Kalangala District in Lake Victoria to the south, Mpigi
District to the southwest and Mityana District to the northwest. Wakiso, where the district
headquarters are located, lies approximately 20 kilometres (12 mi), by road, northwest of
Kampala, the capital of Uganda and the largest city in the country. The coordinates of the district
are: 00 24N, 32 29E. The study considered insurance agricultural agent, insurance underwriters,
small scale farmers and Insurance Companies from which a study sample was drawn.
3.5 Sampling Technique and procedure
Sampling is a technique (procedure or device) employed by a researcher to systematically select
a relatively smaller number of representative items or individuals (a subset) from a pre-defined
population to serve as subjects (data source) for observation or experimentation as per objectives
of his or her study (Sharma, 2017). The researcher used both qualitative and quantitative
sampling techniques as explained below.
3.5.1 Qualitative sampling technique
3.5.1.1 Purposive Sampling
Purposive sampling was used and this is the sampling design based on the judgment of the
researcher as to who provided the best information to succeed for the objectives study. The
person conducting the research focuses on those people with the same opinion to have the
required information and be willing of sharing it (Rahi, 2017). One of the advantages of
purposive sampling is its convenience and cost effectiveness (Buchanan, 2017).The researcher
used purposive sampling because it saves time as one only focuses on respondents that are
believed to have the information required about the study variables. The researcher used
purposive sampling technique to sample (5) Insurance Agricultural Agent and (2) Insurance
Companies.
25
3.5.2 Quantitative sampling technique
3.5.2.1 Simple Random Sampling
Simple Random Sampling is the sampling design where each member of the population has an
equal chance of being selected as subject (Etikan, 2017). One of the best things about simple
random sampling is the ease of assembling the sample. It is also considered as a fair way of
selecting a sample from a given population since every member is given equal opportunities of
being selected (Majid, 2018). The researcher used this method because it eliminates bias as
members of the sample are selected randomly hence facilitates generalization of the study
findings. Simple random sampling technique was applied on selecting 144 farmers in the district.
3.6 Determination of the Sample Size and selection
The researcher determined the sample size using Taro Yamane (1970) formulae, as cited in
Amin, 2005). The formula is presented below;
N
Sample size (n) = 2
1+ N ( e )
Where: N is the total population size under study i.e. (244) participants from Wakiso district
When substituted;
“e”; is the confidence level of (95%).
“n” is the required sample for study.
244
Sample size (n) = 2
1+ 244(0.05)
n =151
This means that a population of244was represented by a sample size of 151 respondents. A
sample of 151 respondents was distributed using Krejcie & Morgan (1970) table as illustrated
below;
Table 3.1: Sample Size of Respondents
Stratum Target Population Sample Size Sample Technique
Insurance agricultural 5 5 Purposive Sampling
agent
Small scale farmers 230 144 Simple Random
sampling
Insurance Companies 2 2 Purposive Sampling
26
3.7 Data Collection Methods
3.7.1 Qualitative data
Qualitative data involved in-depth probing and application of subjectively interpreted data which
enabled the researcher to gather in-depth information about the study, for example, unstructured
interviews served this purpose. The interview method was used to collect data as explained
below.
3.7.1.1 The interview method
An interview is a series of questions a researcher addresses personally to respondents. An
interview may be structured (where you ask clearly defined questions) or unstructured, where
you allow some of your questioning to be led by the responses of the interviewee (Osang, 2013).
According to Alshenqeeti, (2014) interviews enabled the researcher to obtain information that
was inaccessible and they can be done anywhere or in different forms. Interviews were used by
the researcher because they enabled the researcher to get in depth information especially from
people in high superiority positions and also allow further probing and giving clarity when
questions cannot easily be understood by the interviewee. Interviews were held by insurance
Agricultural Agent and Insurance Companies.
3.7.1.2. Documentary review

Documentary review is a method that may be regarded as physically embodied texts, where the
containment of the text is the primary purpose of the physical medium (Barifaijo et al, 2010).
This involved documents like reports of Uganda Insurers Association and Uganda Insurance
Consortium.
3.7.2 Quantitative data
Questionnaires are a list of questions either open-ended or close-ended for which the respondents
give answers(Muhammad & Kabir, 2018). Questionnaires allowed the consistent collection of
quantitative data for better analysis, are inexpensive to design and administer and consume less
time to administer. The researcher used this method because it saves time and can be
administered in various forms making it easier to collect the necessary data. Additionally, this
method was used by the researcher because it can reach a large group of people. Questionnaires
were distributed to small scale farmers.
27
3.8 Data Collection Instruments
3.8.1 Questionnaire
Questionnaire was developed following recommended guidelines by various scholars that
include (Sekaran & Bougie, 2016) and in line with the objectives of the study. Quantitative
questions were open ended quantitative questions. The questionnaires were distributed to small
scale farmers and were collected when duly filled by the respondent. Questionnaire as a tool for
data collection was used because it was less expensive compared to other methods of data
collection and it also covers a wide geographical area.
3.8.2 Interview Guide

An interview guide is a set of questions that a researcher asks when interviewing respondents in
order to obtain data required to meet the objectives of the study. It helped the researcher to
understand the perceptions of the respondents better because it is a social encounter which caters
for respondents who are more willing to talk than write as they would prefer to remain
anonymous. The interview guide consisted of open ended questions because these compelled the
respondents to give more unrestricted responses since open end questions are perceived as less
threatening (Cooper, and Schindler, 2018).The open ended questions enabled further probing
between the interviewer and interviewee in order to get more in depth information about the
study variables.
3.8.3 Documentary review checklist

The document review check-list helped the researcher in remembering the most relevant
documents with information pertinent to this research for example the strategic plan, reports, and
minutes of meetings. Document review checklists were useful in clarifying and cross-checking
data found in documents.
3.9 Reliability and Validity of the Research Instruments
3.9.1 Validity of the Instruments
Validity is the degree to which a scale measures what it is intended to measure (Bannigan &
Watson, 2018). According to Amin (2005), validity of an instrument is when it measures what it
is supposed to measure; that the data is collected honestly and accurately represents the
respondents’ opinions. Validity of the quantitative instruments was ensured using CVI (Content
Validity Index). The benchmark that was used is 0.7 meaning that if the instrumement falls
28
below 0.7,it would not be valid hence changes would be made.CVI were obtained using the
formula;
Content Validity Index= Number of relevant items/Total Number of items*100.
Table 3.2: Results of content validity for research tools
Dimensions No of Items Relevant CVI
Awareness of small scale farmers 09 07 0.777
Socio-economic factors 09 08 0.888
Different stakeholders 06 05 0.833
Outcome of the uptake and utilization 05 04 0.800
Average % (CVI) 0.8245
Table 3.2 presents an average all 0.8245 and (0.777, 0.888, 0.833 &0.800 respectively) on all
four variables had a CVIs that were above 0.7, imply that the tool was validity since it was
appropriately answering / measuring the objectives and conceptualization of the study.
According to Mugenda & Mugenda (2003), the tool can be considered valid where the CVI value
is 0.7 and above as is the case for all the four variables provided above.
3.9.2 Reliability of the Instruments

Reliability is consistency of measurement or the degree to which an instrument measures the
same ways each time it is used under the same condition with the same subjects. The instrument
whose validity was tested and assured already was tested for reliability through carrying out a
pre-test or pilot study. Cronbach’s coefficient alpha (a) as recommended by Amin, (2005) was
used to test the reliability of the research instrument. The instrument was deemed reliable if
reliable of 0.7 and above is obtained and therefore, it was adopted for use in the data collection.
The reliability of instruments was established using Cronbach Alpha Coefficient which tests
internal reliability and the average reliability test result for research was 0.84 which is
recommended as given below in 3.3.
Table 3.3: Reliability test results of research instruments.
Study variables Cronbach’s Alpha
Awareness of small scale farmers 0.745
Socio-economic factors 0.986
Different stakeholders 0.876
Outcome of the uptake and utilization 0.765
29
Average Cronbach Alpha coefficient for variables 0.843
3.10 Procedure of Data Collection

The following procedures were followed during data collection: An introductory letter from
Makerere University will be obtained by the Researcher that introduced her to the relevant
authorities in the field. The Researcher got permission from the authorities in the district whom
questionnaires and interview guides were administered according to the sample size. The
questionnaires were administered by the researcher herself, filled by the respondents and
returned in due course. The Researcher made appointments to conduct interviews with key
informants at their convenient times. Interview guides were conducted personally with the key
informants.
3.11 Data analysis
3.11.1 Qualitative data analysis
The qualitative data collected was coded and grouped according to the study objectives and
emerging themes. Analysis was carried out using thematic analysis. Thematic analysis ensured
that clusters of text with similar meaning were presented together (Devetak, Glažar & Vogrinc,
2010). This enabled making of comparison between qualitative and quantitative data.
3.11.2 Quantitative data analysis
Quantitative data was analyzed at different levels, namely Univariate and Bivariate. At
Univariate level, the data was based on percentages from the frequency tables. At Bivariate level,
the dependent variable (DV), utilization of agriculture insurance was correlated using Pearson’s
Correlation Coefficient and regressed against uptake the independent variables (IVs). The
statistical package for social scientists (SPSS 20.0) was used in the analyzing of data. The
analyzed data was interpreted in terms of frequencies and percentages. Tables and pie charts
were used to present the study findings for ease of understanding.
3.12 Ethical Considerations

According to Leary (2014), ethical issues refer to the integrity in the production of knowledge, as
well as the dignity welfare of the researched. These include the following;
Voluntary participation: The research participants were informed that their participation in the
study was not to be rewarded in anyway; it was entirely on voluntary basis. All the research
30
participants were informed of their rights to refuse to be interviewed, or to withdraw at any point
for any reason, without any prejudice or explanation.
The research participant’s privacy was assured by the researcher, who kept all the information
safely locked up during the research process. Only the researcher had access to the data
collected.
Informed consent: Before starting the study, the researcher provided with accurate and complete
information to research regarding the purpose of the study. Participants agreed before the
interviews, and no respondent were forced to participate in the research.
3.13 Limitations and challenges

Limited financial resources to cater for typing, transportation, feeding and accommodation while
in the field. However the researcher solicited for funds from the parents and friends to ensure
that the research is done and completed on time.
The high level of illiteracy among the respondents to the extent that many were not in position to
fill the questionnaires, this was overcome by use of the alternatives available which was the use
of interviewers.
Respondents not willing to respond to questions/ giving excuses for not filling questionnaires,
the researcher explained to the respondents the purpose of the study.
CHAPTER FOUR
DATA PRESENTATION, ANALYSIS AND INTERPRETATION
31
4.1 Introduction
This chapter presents the findings, analysis and interpretations to the findings. The findings are
presented according to the objectives of the study. The study focused on Uptake and utilization
of agricultural insurance in Uganda: a study of small scale farmers in Wakiso district. The study
was specifically premised on the following research objectives: to assess the awareness of small
scale farmers about the existing agriculture insurance schemes, to examine how socio-economic
factors influence uptake and utilization of agriculture insurance by small scale farmers, to
examine the role of the different stakeholders in implementation of agricultural insurance and to
determine the outcome of the uptake and utilization of agricultural insurance for the small scale
farmers in Wakiso district
4.2 Background characteristics of respondents
An orderly presentation and interpretation of the demographic profile of the report sample is very
important because it enables the researcher to obtain the overall mental and physical picture of
the sample (McCombes, 2020). He notes that it’s important especially in attaining an
appreciation of their perceptions while linking the conceptions under study. Pallant, (2020) posits
that, in social sciences research, personal characteristics of respondents have a very significant
role to play in expressing and giving the responses about the problem. Thus, the demographic
characteristics (education level, sex, among others) for the 100 respondents were examined,
presented and used later in the report to make systematic conclusions.
4.2.1 Gender of the respondents
The gender characteristics of respondents were investigated for this study, and findings are
presented in Figure 4.2 below.
Figure 4.2: Gender of respondents
32
Male
45%
Female
55%
Source: Primary Data (2021).

Figure 4.2 shows that the majority of the respondents were females 55(55%) and males were
45(45%). This is attributed to the nature of the (small scale farming) working force where
females contribute a bigger percentage of workers as compared to the males. It is also important
to note that although there were gender disparities in favor of the females, it is evident that the
study was ultimately gender representative since 45% for males is also a significant
representation of the sample and the population at large. Therefore, the results revealed that
views of both female and male small scale farmers in Wakiso district were represented in this
study.
4.2.2: Age of the respondents
The study looked at age distribution of the respondents by using frequency distribution. The
results obtained on the item are presented in Table 4.4 below.
Table 4.4: Age of the respondents
Category Frequency Percentage

41 and above 13 13
36-40 years 55 55
31-35 years 25 25
26-30 years 02 02
18-25 years 17 17
Total 100
Source: Primary Data (2021)
33
From the above Table 4.4, the majority of respondents who took part in the study were between
36-40 years making a total percentage of 55%, 02% were between the age of 26-30 years, those
between 31-35 years were 25%,17% were between 18-25 years and those that who were above
41 years were 13%. This indicated that all categories of respondents in reference to different age
groups were represented in this study. According to Torkamin (2002) age has an influence in
uptake of agriculture insurance.
4.2.3: Education level of respondents
The respondents were also asked to indicate their education levels which is illustrated in the table
4.5 below
Table 4.5 Education level of respondents
Category Frequency Percentage

Primary 50 50
O-level 17 17
A-level 13 13
Tertiary/ University 15 15
None 5 5
Total 100 100
Findings in the Table 4.5 above indicates that majority of the respondents had attained primary
level (50), primary level were (28%), O-level holders were (15%), and 5% had not attained any
level of education. These results indicate that the respondents had good qualifications and the
right skills and knowledge to deliver. Besides, the respondents were able to understand, read,
interpret the questionnaire and gave relevant responses. The findings thus reveal that most of the
respondents were high school graduates. According to Torkamani (2002) the level of education
has a positive correlation in the adoption of insurance. Therefore considering that most of the
farmers haven’t preceded past secondary education this will have an influence in the use of
agriculture insurance.
34
4.2.4: Marital status
The respondents were asked about their marital status and the following information was given
as illustrated below;
Table 4.6: Marital status of respondents
Marital status Frequency Percentage
Single 20 20
Married 56 56
Separated 9 9
Widowed 15 15
Total 100 100

Findings in Table 4.6 shows that 20% of the respondents were single, 56% of respondents were
married, 9% of the respondents were separated and 15% were widowed This implies that most of
the respondents were married, which could be contributed to the fact that the married tend to be
more responsible and will tend to worry about food security more compared to those who are
single or separated. Also it is in agreement with Tiraee (2002) who confirmed that marital status
does have an influence in the uptake of agriculture insurance
4.2.5 Two main types of risks
Table 4.7: Two main types of risks
Types of risks Frequency Percentage
Price 20 20
Production 80 80
Total 100 100
On the two main types of risks, Findings in the Table 4.6 above reveal that majority of
respondents 80% indicated production risk whereas 20% indicated price risk. This implies that
insurance products are often of poor quality and their acquisition can lead to worse outcomes
than without them. The findings are above are supported by the key informants (Insurance
agricultural agent) who eluded that:
35
One aspect of poor product quality is the level of basis risk, which refers to the
probability that insurance does not cover an insurance-holding farmer when they
experience the insured shock because the level of the insurance threshold (often an index)
is imperfectly correlated with losses incurred.
4.2.6 Agricultural Insurance cover
Table 4.8: Agricultural insurance cover
Responses Frequency Percentage

Yield based 27 27
Index cover 43 43
Indemnity approach 30 30
Total 100 100
On the types of agricultural insurance cover adopted by small scale farmer, 27% of the
respondents indicated yield based, 43% of the respondents indicated index cover and 30% of the
respondents indicated indemnity approach. This implies that while implementation of index-
based insurance is viewed from pro-poor lens, poor and subsistence producers are unlikely to tap
the full benefits of insurance partially due to lack of motivation (among other factors) to insure
against losses. The market orientation is equally important in uptake of insurance. Hence, poor
subsistent farmers should be supported to reorient their farm activities to unlock the need for risk
management using insurance based instruments. The findings above are supported by the key
informants (insurance companies) who assert that:
Index insurance schemes should act as one-stop-shop by promoting value-chain and
agri-business linkages from farm gates to the final consumer, including linking farmers
with agro-input dealers, care must be taken so that AICs will not be overloaded with non-
core insurance functions. The concentration on core agricultural risks protection
services may ensure that many farmers, especially smallholder farmers in rural areas in
low-income countries who are mostly unprotected partly due to the non-availability of
agricultural insurance services are covered
Another key informant (insurance companies) indicated that:
Even though index insurance programs and contracts are claimed to have the potential to
protect small-scale farmers in Wakiso district, there is concern about the issues of basis
36
risk usually associated with these parametric insurance programs. Basis risk is the lack
of correlation or mismatch between payouts and actual losses suffered
4.2.7 Main agricultural enterprise

Figure 3.4: Main agricultural enterprise
70
60
50
40 Percentage
30
20
10
0
Crop husbandry Animal husbandry Poultry

The respondents were asked about the main agricultural enterprise engaged in and Figure 4.4
revealed that majority of respondents 66% noted crop husbandry, 24% indicated animal
husbandry and 10% indicated poultry. This implies that farmers heard about agriculture
insurance and majority of them adopted the uptake on insurances schemes. This confirms Surez
et al (2007) argument that by just having heard about insurance a farmer might consider it up but
other factors do influence as well.
4.2.8 Most important animal in your animal husbandry

Table4.9: Most important animal in your animal husbandry
Responses Frequency Percentage

Poultry 20 20
Cattle 48 48
Piggery 32 32
Total 100 100
When asked about most important animal in their animal husbandry, majority of the respondents
indicated cattle, 20% of the respondents indicated poultry and 32% of the respondents indicated
37
piggery. This implies that some insurance types, such as livestock insurance, seem to protect a
section of households that are better off than those worse-off. These finding are supported by the
key informant who noted that:
Effective coverage for livestock index insurance was between 10 and 15 total livestock
units. The majority of rural households do not have as much livestock as these thresholds
suggest. There is, therefore, room for other social protection instruments for various sub-
groups.
4.3.1 The awareness of small scale farmers about the existing agriculture insurance
schemes
Table 4.10: Does knowledge of existing insurance schemes affects the use of agricultural
insurance?
Responses Frequency Percentages

Yes 65 65
No 20 20
Not sure 15 15
Total 100 100
On whether knowledge of existing insurance schemes affects the use of agricultural insurance,
the majority of the respondents 65% indicated yes, 20% of the respondents indicated no and 15%
also indicated not sure. This implies that awareness of insurance is high among the sampled
respondents in the study area. However, it was revealed that only 65% were aware of agricultural
insurance products in the insurance market, consistent with observation made by NIC and Imhire
(2011); Stutley and Mahul (2010) that penetration is low in Uganda.
Figure 4.4: Do Channels of distribution increase farmer’s awareness about the use of
agricultural insurance?
38
Not sure
5%
No
40% Yes
55%

As to whether channels of distribution increase farmer’s awareness about the use of agricultural
insurance, findings in the Figure 4.6 above show 55% of the respondents noted yes, 40% of the
respondents indicated no and 5% of the respondents were not sure. Following respondents’
awareness of agricultural insurance products in the study area, their opinion on media for
promoting agro-insurance to small scale farmers was also sought. The results indicated that all
the respondents were positive that agro-insurance can best be promoted on televisions and local
radio stations in the study area.
Figure 4.5: Channels you get your own agricultural insurance
Through farmer meetings

7%
News paper
10%
Television
60%
Local radio station
23%

With regard to what channels you get your own agricultural insurance, majority of the
respondents 60% alluded to Television, 23% of the respondents noted Local radio station, 10%
of the respondents noted newspaper and 7% of the respondents indicated through farmer
39
meetings as useful promotional tools for promoting agricultural insurance in the study area. This
implies that the insurance product distribution through existing services or networks operating in
rural areas is important to increase coverage, reduce transaction costs, and reach more clients.
Complementary support for agricultural insurance operations could include the promotion of
“aggregators”; that is, farmers associations, cooperatives, producer associations, rural banks, and
microfinance institutions as delivery channels for agricultural insurance. the findings above are
supported by the key informants (Insurance agricultural agent) who revealed that:
Agricultural markets posit that marketing system vary from farmer markets, cooperative
markets, corporate markets to contract markets and identified channels for marketing
agricultural products as brokers, cooperative societies, traders, markets, assemblies,
wholesalers, retailers and processors. This suggests that the most preferred channel for
selling insurance to small scale farmers in the study area should be through the
insurance companies
Figure 4.6: Does Credit financing cost increase farmer’s awareness about the use of
60
50
40
30
Percentages
20
10
0
Yes No Not sure
As to whether credit financing cost increase farmer’s awareness about the use of agricultural
insurance, majority of the respondents 50% indicated no, 40% indicated yes whereas 10%
indicated not sure. This implies that combining insurance with other services such as credit is
one of the ways to make insurance popular and the basic idea is that farmers might be more
enticed to purchase insurance if they get more services through one contract. It is also easier for
providers to deliver multiple services without increasing their administrative and transaction
40
costs, thereby lowering the unit costs for a single product. The findings above were supported by
the key informants (insurance companies) that revealed that:
There is a need to educate farmers about the importance of crop insurance. Linking
agricultural insurance with other products can enhance the demand for crop insurance
and lead to the successful adoption of agricultural insurance. Linking agricultural
insurance with other financial services such as credit is beneficial to farmers because it
provides them with capital to purchase insurance premiums and hence reduce the use of
scarce resources to finance risk cover.
4.3.2 The socio-economic factors influence uptake and utilization of agriculture insurance
by small scale farmers
Table 4.11: Does the cost of insurance affects farmer’s use of agricultural insurance?

Yes 70 70
No 20 20
Not sure 10 10
Total 100 100
As to whether the cost of insurance affects farmer’s use of agricultural insurance, 70% of the
respondents indicated yes, 20% of the respondents indicated no and 10% alluded not sure. This
implies that cost of insurances influences the decision by farmers to go for insurance to a very
large extent. The findings are in line with the findings of a study done by Baquet and Smith
(2016) who found that agriculture education, history of risk, the amount of debt to credit
institutions and banks, manufacturing and product rate fluctuations and rate insurance, affect in
the participation of farmers in insurance scheme. The findings are supported by the key
informants (agricultural insurance agent) who assert that:
The cost of commercially viable agricultural insurance is therefore high and prohibitive
to both the provider and farmers. The costs of providing agricultural insurance can be
subdivided into start-up costs, operational costs and transaction costs. Insurance
companies are required to have sufficient reserve capital to ascertain meeting insures’
claims when they arise. Providers also have to pay reinsurance costs to insure their
losses too.
41
Figure 4.7: Does the type of farming practiced (crop/livestock) affects farmer’s use of
Not sure
No
Percentages
Yes
0 10 20 30 40 50 60 70 80

With regard to whether type of farming practiced (crop/livestock) affects farmer’s use of
agricultural insurance, 70% of the respondents indicated yes, 14% noted no and 6% indicated not
sure.. This confirms Surez et al (2007) argument that by just having heard about insurance a
farmer might consider it up but other factors do influence as well.
Table 4.12: Does the education level among farmers affect farmer’s use of agricultural
insurance?

Yes 80 80
No 15 15
Not sure 5 5
Total 100 100
On the question whether education level among farmers affect farmer’s use of agricultural
insurance, 80% of the respondents indicated yes, 15% noted no and 5% indicated not sure. This
implies that education neutrally affects the uptake of agriculture insurance and that income
generated from farming affects the uptake of agriculture insurance to a very large extent as
indicated by 80%. According to Torkamani (2002) the level of education has a positive
correlation in the adoption of insurance which influences in the use of agriculture insurance.
42
Table 4.13: Do the risks surrounding crops and livestock farming affects farmer’s use of
Yes 60 60
No 30 30
Not sure 10 10
Total 100 100
With regard to whether the risks surrounding crops and livestock farming affects farmer’s use of
agricultural insurance, 60% of the respondents indicated yes, 30% noted no and 10% indicated
not sure. This implies that the risks surrounding crop and livestock influences the decision by
farmers to go for agriculture insurance to a very large extent. The findings are in line with the
findings of a study done by Baquet and Smith (2016) who found that history of risk affect in the
participation of farmers in insurance scheme. The findings are supported by the key informants
who revealed that:
Even though index insurance programs and contracts are claimed to have the potential to
protect small-scale farmers in Wakiso district, there is concern about the issues of basis
risk usually associated with these parametric insurance programs. Basis risk is the lack
of correlation or mismatch between payouts and actual losses suffered. In this case,
insured farmers may still suffer from the adverse effects of uncovered losses because the
insured index may not perfectly reflect the actual loss incurred.
Figure 4.8: Does family income level affects farmer’s use of agricultural insurance?
43
Not sure
4%
No
23%
Yes
73%

As to whether family income level affects farmer’s use of agricultural insurance, 73% of the
respondents noted yes, 23% indicated no and 4% of the respondents indicated not sure. This
implies that family income was found to have a positive effect on payment of insurance premium
which influence use of agricultural insurance. The findings are supported by the key informants
(insurance companies) that assert that:
That insurance uptake is correlated with farmers’ wealth. Indeed, insurance premium is
usually paid from current income or accumulated income (represented by savings). The
lack of access to credit has traditionally been considered a major obstacle to technology
adoption and development. In addition since the agricultural insurance policies are
purchased at the onset of the season, coinciding with the purchase of other agricultural
inputs (labor for land preparation, seeds, fertilizer, among others) only the better-o ff can
afford the policy.
4.3.3 The role of the different stakeholders in implementation of agricultural insurance

Wakiso district
44
Table 3.14: Do the farmer groups affect the uptake of Agriculture insurance cover in your
Wakiso district?

Yes 64 64
No 15 15
Not sure 21 21
Total 100 100
With regard to whether farmer groups affect the uptake of Agriculture insurance, 64% of the
respondents indicated yes, 15% noted no and 21% indicated not sure. This implies that
participation in farmers’ groups is also positively associated with intensity of crop insurance use.
The results concur with (Suresh et al., 2011) that participation in farmer organizations has the
capacity to encourage intensive purchase of crop insurance premiums in a household. To support
the above argument, the key informants revealed that smallholder farmers’ adaptation strategies
were not effective at all. The key informants based their reasons mainly on lack of access to
financial services as adaptation measures. They specifically said almost all smallholder farmers
lack access to loans from financial institutions as adaptation mechanisms due to the collateral
security requirements. A nucleus farmer who had over 30 women out-growers under him said:
I even used my agricultural insurance policy as a guarantee for a loan and yet was
denied and was asked to be making weekly payments as the collateral security. This is the
plight of a leader of a group of smallholder farmers, and one can imagine the fate of the
women out-grower farmers under me [and other smallholder farmers] once it comes to
access to agro-loans.
Another key informant revealed that:
Participation in farmer groups is also positively associated with intensity of crop
insurance use. The participation in farmer organizations has the capacity to encourage
intensive purchase of crop insurance premiums in a household. On one hand, social
organizations provide pathway for information acquisition through training and peer to
peer learning about agricultural insurance. On the other hand, farmer organizations may
45
help to alleviate liquidity constraint through informal credit lending which can in turn
empower the resource constrained households to afford insurance premiums.
Table 4.15: Does the private sector affect the uptake of Agriculture insurance cover in
Wakiso district?

Yes 74 74
No 19 19
Not sure 7 7
Total 100 100
As to whether the private sector affects the uptake of agriculture insurance cover in Wakiso
district, majority of the respondents 74% indicated yes, 19% of the respondents indicated no and
7% of the respondents indicated not sure. This implies that private sector can be a catalyst by
ensuring that insurers target small-holders, particularly if a privately owned insurer involved in
index insurance contracts. Private agencies also play a central role in properly positioning index
insurance programs within the existing insurance and financial regulatory framework. The
findings above are supported the key informants (insurance companies) who revealed that:
All successful agricultural insurance initiatives involve multi-stakeholder partnerships,
and most include private partnerships. Insurance is most effective when it is integrated
into agricultural value chains, and engages a range of actors such as input suppliers,
agricultural advisory services, farmer organizations, agricultural commodity markets,
and agro-processors. Because agricultural insurance markets often suffer from market
inefficiencies due to information asymmetries, lack of data, and limited access of insurers
to reinsurance, the private sector alone cannot develop insurance for smallholder
farmers, and public-private partnerships are needed.
Figure 4.9: Do the long procedures in the acquisition of the policy affect use of agriculture
insurance?
46
Not sure
No Percentages
Yes
0 10 20 30 40 50 60

On the question whether long procedures in the acquisition of the policy affect use of agriculture
insurance, 55% of the respondent agreed with the statement, 25% of the respondents indicated no
and 20% of the respondents were not sure about the statement. This implies that long procedures
in the acquisition of the policy affect the uptake of Agriculture insurance among small scale
farmers.
Table 4.16: Do the high costs of insurance premiums affect use of agriculture insurance
among small scale farmers?

Yes 62 62
No 18 18
Not sure 20 20
Total 100
As to whether high costs of insurance premiums affect use of agriculture insurance among small
scale farmers, 62% of the respondents noted yes, 18% indicated no and 20% of the respondents
indicated not sure. This implies that cost was found to have a positive e ffect on payment of
insurance premium. The insurance uptake is correlated with cost. Indeed, insurance premium is
usually paid from current income or accumulated income (represented by savings). The findings
above are supported by the key informant who revealed that:
The cost of commercially viable agricultural insurance is therefore high and prohibitive
to both the provider and small scale farmers. The costs of providing agricultural
47
insurance can be subdivided into start-up costs, operational costs and transaction costs.
Insurance companies are required to have sufficient reserve capital to ascertain meeting
insures’ claims when they arise. Providers also have to pay reinsurance costs to insure
their losses too. For high loss events such as weather shocks, thresholds for reserve
capital are high.
farmers
Table 4.17: Does the Uptake of agricultural insurance increase small scale farmer’s
income?

Yes 53 53
No 17 17
Not sure 30 30
Total 100 100
As to whether Uptake of agricultural insurance increases small scale farmer’s income, 53% of
the respondents noted yes, 17% indicated no and 30% of the respondents indicated not sure. This
implies that Uptake of agricultural insurance a ffects the payment of insurance premium which
influence use of agricultural insurance. The findings are supported by the key informant assertion
that:
On-farm income is positively correlated with the amount farmers are willing to pay as
insurance premium. Indeed, premiums are paid with income and hence farmers with high
farm income tend to have higher payment capacity than those with low farm income,
ceteris paribus. Many of the poorest farmers in Wakiso district indicated that they simply
could not afford to pay any insurance premiums (at least prior to harvest) because their
cash flow situation was so dire and their incomes and wealth were so low.
Table 4.18: The Uptake of agricultural insurance increases small scale farmer’s yields

Yes 24 24
48
No 67 67
Not sure 9 9
Total 100 100
As to whether the uptake of agricultural insurance increases small scale farmer’s yields, majority
of the respondents 67% indicated no, 24% of the respondents indicated yes, and 9% of the
respondents indicated not sure. This implies that adaptation of strategies being helpful or
effective to some extent also implies that they may not be 100% effective or may even be
destructive in some ways. A major challenge with bolstering demand for agricultural insurance is
farmers’ budget constraints. The prospective market for insurance is therefore divided into those
with higher incomes demanding more insurance and those with lower incomes who cannot
afford it. Moreover, weather shocks in previous periods reduce farmers’ future income and
demand.
49
CHAPTER FIVE
SUMMMARY, DISCUSION, CONCLUSIONS AND RECOMMENDATIONS
5.1 Introduction
This study investigated the uptake and utilization of agricultural insurance in Uganda, using
small scale farmers in Wakiso district as a case study. The study focused on the awareness of
small scale farmers about the existing agriculture insurance schemes, how socio-economic
factors influence uptake and utilization of agriculture insurance by small scale farmers, the role
of the different stakeholders in implementation of agricultural insurance and the outcome of the
uptake and utilization of agricultural insurance for the small scale farmers in Wakiso district.
This chapter presents a summary, discussion of findings, conclusions and recommendations
made by the study, and all these are in line with the research objectives.
5.2 Summary of key findings
schemes
The study found that awareness affects the use of agriculture insurance among farmers in Wakiso
district. This was evidenced by the fact that 30% of the respondents interviewed had not heard of
agriculture insurance and the fact that only 10% of the respondents interviewed had agriculture
insurance cover for their crops and livestock. This implies that awareness is one of the major
factors influencing the use of agriculture insurance among small scale farmers in Wakiso district.
The study also found that socio-economic factors such as the cost of insurance, type of farming
practiced, risks surrounding crops and livestock and income generated from farming influences
the use of agriculture Insurance.

Wakiso district
The study found that stakeholders influence the use of agriculture insurance in through offering
insurance at high costs premiums, long procedures in the acquisition of the policy, delays in
compensation in case of loss, inadequate creation of awareness on the available policies and
limited risk coverage by the insurance firms.
50
farmers
The results show that outcome of small scale farmers is influenced by insurance uptake
5.3 Discussion of findings
schemes
The study findings concur with Suresh Kumar et al (2010) who analyzed the farmer’s perception
and awareness towards crop insurance as a tool for risk management in Tamilnadu. The study
critically examined how the farmers perceive about the risk mitigation measures provided by the
Government and about their awareness.. It concluded that the factors such as gross cropped area,
income other than agricultural source, presence of risk in farming number of workers in the farm
family, satisfaction with the premium rate and the affordability of the insurance premium
amount fount to be significantly and positively influence the adoption of insurance and premium
paid by the farmers.
The findings also support the views of Chankova et al. (2018) that based on the human capital
theory which uses education a proxy, several studies have established a correlation between
education and insurance uptake, for instance) reports of positive correlation between health
insurance uptake and education of the household head.
Sherrick et al. (2014) reported that insurance users in general, and revenue insurance users in
particular, are expected to be more experienced and better educated, indicating a greater
responsiveness of insurance use to modern, more sophisticated approaches to risk management.
Such attributes may lead to greater precision in risk assessments and to possible changes in risk
attitudes that complement improved risk carrying capacities. The lack of skill can increase their
fear of the risks inherent in agricultural production and consequently their needs to resort to risk
management strategies (Ben-Houassa, 2010).
The study findings are in agreement with (World Bank, 2018), that revealed that Literacy is not
only important in order to know about insurance but also to correctly understand insurance
contracts. When farmers are not able to understand concepts like basis risk, demand remains low.
Education and information tend to run concurrently. While insurance providers might not change
the literacy skills of the farmers, they can provide more information. The evidence shows that
51
where information has been provided, farmers and pastoralists increase their understanding of
insurance as well as demand (Ali et al., 2020).
Further still, the study finding are in agreement with Dick et al., (2011) who revealed that the
insurance product distribution through existing services or networks operating in rural areas is
important to increase coverage, reduce transaction costs, and reach more clients. Complementary
support for agricultural insurance operations could include the promotion of “aggregators”; that
is, farmers associations, cooperatives, producer associations, rural banks, and microfinance
institutions as delivery channels for agricultural insurance (World Bank, 2010). This distribution
channel capitalizes on existing relationships since farmers are more likely to take advice from
someone they know and trust (Kilimo Salama, 2011).
The study findings are agreement with Bierer and Eling (2012) report that high premium is a
major impediment to micro insurance uptake. Brouwer et al., (2016) reveal a positive relation
between willingness to pay (WTP) for flood protection through the construction of an
embankment and average annual household income, which suggests that higher income
households are willing to spend more money (i.e. pay a higher flood protection premium) to
protect themselves against flood damage risk in Bangladesh. Akter and Brouwer (2016) found
out that the two most common reasons for not buying an insurance scheme in principle are
‘limited financial income and ‘disliking of terms and conditions of proposed flood insurance
scheme.
The study findings are in agreement with Njue et al. (2018) reported that insurance users in
general, and revenue insurance users in particular, are expected to be more experienced and
better educated, indicating a greater responsiveness of insurance use to modern, more
production and consequently their needs to resort to risk management strategies (Lin et al.,
2015).
52
Wakiso district
The study findings are in congruence with Ghazanfar et al. (2015) who investigated the factors
that influence farmers’ decisions to participate and purchase crop insurance in Pakistan. Their
findings revealed that the majority of farmers were interested in purchasing crop insurance but
that there was still a large number of farmers who showed no interest in it. Their findings also
indicated that low literacy rates and little awareness of the expected benefits of crop insurance
might be the reasons why farmers were refusing to accept it. Farmers with more loss experience
were more interested in purchasing crop insurance because they felt insecure about their future
yield. They felt that it was far better to have crop insurance to avoid losses from future climatic
hazards.
The findings are in agreement with Balmalssaka et al. (2015) who revealed that education, access
to credit and farmers’ experience of other forms of insurance were the most significant factors
that determined the farmers’ interest in purchasing crop insurance. Damage incurred due to
drought increased the probability of farmers purchasing crop insurance. The past disaster event
return period and the number of non-farm income sources reduced the likelihood of farmers to
make the decision to purchase crop insurance. To enhance farmers’ purchasing of crop
insurance, there is a great need to integrate crop insurance into micro-finance.
farmers
The study finding concur with Shaik et al., (2018) that the expected yield may be assessed by
asking the farmers about their subjective perception about the yield level. They find that farmers
that perceive a high level of expected yield are less willing to purchase crop insurance. The
differences in expected yield may indicate variations in soil quality and management skills.
Farmers with high expected yield also have a higher expected income. Differences in these
factors may indicate differences in yield risk, which may affect insurance use. Perceived yield
risk: The farmers have a greater risk to be subjected of negative weather, pests or deceases
(World Bank, 2019). Farmers that perceived a higher level of yield risk are also more willing to
purchase crop insurance (Shaik et al., 2018).
53
According to Riwthong et al. (2016), farmers are mainly concerned with income variability and
income stability is not necessarily brought about by price stabilization. Higher profits are usually
associated with higher risks and it is important to manage risks effectively. It has been illustrated
that, in order to succeed, farmers need to generate more profit and be more competitive (FAO,
2016). Appropriate risk management is more effective and better farming opportunities occur
when farmers have a clear understanding of the farming environment and when they are aware of
potential problems and know how to decrease their effects.
Study findings also support Delavallade et al., (2015) that simply choosing between cash and
insurance might reveal immediacy biases rather than effective long-term protection and poverty
reduction potential. The evidence indicates that while farmers might prefer cash, agricultural
insurance provides better opportunities for long-term poverty reduction and disaster
management. In a simulation study, Carter and Janzen (2018) showed that enabling farmers to be
insured dominated other social protection instruments such as cash transfers. By testing a multi-
generational household model of consumption, accumulation and risk management, they found
that a 50 percent increase in premium subsidies propped up insurance and slowed both the
poverty rate and poverty depth, leading to a 20 per cent increase in GDP growth.
5.4 Conclusion
schemes
From the study, it was concluded that lack of awareness is one of the major factors influencing
the use of agriculture insurance among farmers in Wakiso district.
It was also concluded from the study that socio-economic factors such cost of insurance, type of
farming practiced, risks surrounding crops and livestock and income generated from farming
influences the use of agriculture Insurance.
54
Wakiso district
Finally it was concluded from the study that stakeholders influences the use of agriculture
insurances among farmers in that they charge high premiums, have long procedures and delay
compensation in cases of loss.
The study findings revealed that small scale farmers in Wakiso district are exposed to a
multiplicity of agricultural risks, both weather, and non-weather-induced. These risks are
reportedly visiting untold hardships on smallholder farmers with severe food security
implications.
farmers
The findings revealed that farmers perceive high levels of expected yield are less willing to
purchase crop insurance. The differences in expected yield may indicate variations in soil quality
and management skills. Farmers with high expected yield also have a higher expected income.
Differences in these factors may indicate differences in yield risk, which may affect insurance
use.
5.5 Recommendations
The following were the recommendations of the study:
schemes
The study recommends that more awareness should be created among farmers. This can be done
by holding agriculture meetings with farmers in order to educate them on the benefits and the
importance of use of agriculture insurance. This will promote the uptake of agriculture insurance
among farmers in Wakiso district.
Rolling out extensive and intensive awareness creation and sensitization programs on
agricultural insurance activities. This will not only address the challenge of low awareness and
penetration rates and the complex subject of agricultural insurance (especially index-based AIPs
and contracts) but also expose smallholder farmers and other agricultural insurance stakeholders
to the existence and benefits of agricultural insurance.
55
The study finally recommends that the organizations selling the insurance policies to farmers
should reduce the procedures and also compensate farmers immediately in cases of loss. This
will help will help in building the confidence of the farmers in purchasing the policies thus
promoting agriculture insurance.
The study also recommends that the insurance premiums charged on agriculture insurance
policies should be reduced. This is based on the fact that farmers see the cost of insurance to be
so high thus hindering their uptake.

Wakiso district
Engagement of all stakeholders including farmers in the design of derivative insurance products.
This can be achieved by developing of feedback mechanism to promote conception and
formation of practical and result oriented approaches to adapt to climate change. Participatory
approach helps in designing insurance products that would take into the varying socio-economic
conditions of the farmers and targeting economically viable enterprises to enhance acceptance
whilst accelerating uptake.
Providing agricultural insurance services based on public/private partnership model. Piloting of

an index-based agricultural insurance called IIPACC in Wakiso district in 2009 was initiated by
GIZ in partnership with the government of Wakiso district represented by the NIC and has since
been expanding to cover the entire country. As an emerging industry with colossal capital,
technical, human, financial, material, and infrastructural outlays requirements, there is the need
for government support to the industry to ensure its viability, profitability, and sustainability.
Coupling the provision and purchase of agricultural insurance contracts with government
supported and subsidized AIPs and policies to ensure the accessibility, affordability, and
availability of agricultural insurance services to smallholder farmers. This may in turn promote
the viability, profitability and sustainability of AICs and programs.
56
Government should be in the frontline to support crop insurance initiatives with relevant
legislations that promote growth of micro-insurance sector as well as providing key investment
infrastructure to the involved private sector partners. Government should also develop safety net
program aimed at providing smart subsidies that are targeted to the poor and vulnerable
population groups of farmers to accelerate insurance uptake.
farmers
Continued training of farmers on crop insurance in addition to other sustainable risk reduction
and transfer measures reduce impact of the climate change on household livelihood. Therefore,
crop insurance should not be promoted in isolation with other risk management techniques.
The government can offer incentive schemes where they subsidize premiums in the area of
agricultural Insurance and then set up strategies for long term sustainability. This will greatly
contribute to the achievement of the millennium development goals in the area of food security
and poverty eradication. Further studies can be done on adoption of insurance by other crop
farmers and small scale farmers.
Bundling the purchase of agricultural insurance policies with the provision of agro-inputs and
agro-meteorological, extension, agronomic information as well as marketing and agro-value
chain opportunities.
5.6 Contributions of the study
This dissertation research approached this issue differently by undertaking the concurrent
identification and discussion of both weather and non-weather-based agricultural risks affecting
smallholder farmers in Wakiso district. This position was informed by my fieldwork where
smallholder farmers indicated that both weather/climate and non-weather/climate-induced
agricultural risks posed serious challenges to their agricultural activities.
Another significant contribution of this study to the theoretical enhancement and consolidation in
the agricultural adaptation literature from multi-layered stakeholder perspectives in Wakiso
district is a finding contrary to the established convention by some researchers that there is a
sequential and predictable pattern of adaptation circuit to climate-induced agricultural risks.
57
Furthermore, this study based on system approach provides technical guidance on product
development, distribution channels and models for supplying agricultural insurance and offers
insurance practitioners a framework for developing and underwriting insurance products for
farmers in the cashew subsector in Wakiso district, since Stutley (2010) made it explicit that
there is lack of knowledge and skills on product development, distribution channels for
marketing insurance.
5.7 Limitations of the study

The study encountered some limitations including uncooperative behavior of some respondents
where others were un-approachable coupled with reluctance by some of them to give
information. However, the researcher mitigated this by assuring the respondents that the study
was for academic intentions only and she showed them her university identity card.
Furthermore, the researcher was limited by extraneous variables such as honesty of the
respondents. The researcher mitigated this by encouraging the respondents to be truthful since
the results of the study if released would help them understand how the company is fairing in
environmentally conscious strategic management. Some respondents were not able to respond to
the questionnaire in a timely manner hence limiting the researcher in the number of
questionnaires retrieved.
The low literacy level of some farmers selected for interview made it difficult for the researcher
to cover comprehensive information on agricultural insurance are of study. During the research it
was realized that most farmers lack information on general insurance.
5.8 Recommendations for Further Research

The study was carried out in Wakiso district investigating the uptake and utilization of
agricultural insurance in Uganda, using small scale farmers as a case study. The researcher
therefore recommends that the same study should be carried out in other counties.
The researcher further recommends that another study to be done on the benefits of use of
agriculture insurance to farmers which was not the focus of this study
More research can be done in Agriculture insurance by interested bodies such as Insurance
Regulatory Authority, Insurance companies, Ministry of Agriculture and fellow students.
58
Exploring how agricultural insurance programs and contracts can promote sustainable
agricultural practices and climate change mitigation while addressing unintended consequences
at the same time.
59
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66
APPENDICES
APPENDIX ONE: QUESTIONNAIRS FOR SMALL SCALE FARMERS

Dear Respondent,
I am Wanyana Sarah a student of Makerere university undertaking a Master’s of Art (Sociology)
Degree. I am undertaking a research titled “Uptake and utilization of agricultural insurance in
Uganda: a study of small scale farmers in Wakiso district”. The questionnaire provides a set of
structured questions seeking responses on the topic as provided. Please be as objective as
possible in filling this questionnaire. All responses provided will remain confidential and will be
used purely for academic purposes.
BACKGROUND INFORMATION
Date of interview …………………………………….
Name of interviewer ……………………………………….
1) Parish ………………………………….
2) Village ………………………………………
3) Gender of respondent (1) Male (2) Female
4) Age of respondent ……………… years
5) Formal education level completed (1) Primary (2) O-level (3) A-level
(4) Tertiary/University (5) None
6) Marital status (1) Single (2) Married (3) Separated
(4) Widowed
7) What year did you take up agricultural insurance? ……………….
8) What prompted you to take up agricultural insurance? ……………..
9) What two main risks (or worries) prompted you to take up insurance?
(a)…………………………………..
(b)…………………………………….
10) What agricultural insurance cover, in particular, did you take up?
…………………………………………………………………………………………
11) Why did you take up that one in particular? ………………………………………………
12) Is the insurance cover up to date in premium payment? (1) Yes (2) No
i
13) What is your main agricultural enterprise (1) Crop husbandry (2) Animal husbandry (3)
poultry (4) Other – specify………………..
14) What are the two most important crops in your crop husbandry?
(a)…………………………………..
(b)…………………………………….
15) What are the two most important animals in your animal husbandry
(a)…………………………………..
(b)…………………………………….
16) What type of ownership do you have over the land you use for agriculture? (1)
Freehold/mailo (2) Leasehold (3) Kibanja (4) Other –specify ………..
17) How big is the land, in acres ……………….
18) Please provide one change that has occurred in each of the following as a result of taking
up agricultural insurance
(a) Your family livelihood …………………………………………
(b) Your attitude towards agriculture……………………………………….
(c) Your confidence in agriculture as a business…………………………..
(d) Your will to expand your enterprise……………………………………
(e) Your worries about agricultural risks……………………………..
INFLUENCE OF AWARENESS ON THE USE OF AGRICULTURE INSURANCE
19) Do you think knowledge of existing insurance schemes affects the use of agricultural
insurance?
(1) Yes (2) No (3) Not sure
20) If yes, please explain how ……………………………………………………………….
21) Do you think channels of distribution increase farmer’s awareness about the use of
agricultural insurance? (1) Yes (2) No (3) Not sure
22) Through what channel did you get your own agricultural insurance?
………………………………………………………………..
23) How effective was the channel that you used? (1) Very effective (2) effective (3)
Ineffective (4) Very ineffective
24) If it was not effective, please explain why.
……………………………………………………………………………
ii
25) Does t he Insurance premium cost influence farmer’s awareness about the use of
26) Does credit financing cost increase farmer’s awareness about the use of agricultural
insurance? (1) Yes (2) No (3) Not sure
27) Does the cost of accessing information increase farmer’s awareness about the use of
INFLUENCE OF SOCIO-ECONOMIC FACTORS ON THE USE OF AGRICULTURE
INSURANCE
28) Does the cost of insurance affects farmer’s use of agricultural insurance?
30) Does the type of farming practiced (crop/livestock) affects farmer’s use of agricultural
32) Does the education level among farmers affect farmer’s use of agricultural insurance?
33) Do the risks surrounding crops and livestock farming affects farmer’s use of agricultural
34) Does family income level affects farmer’s use of agricultural insurance
36) Does land ownership affect the use agricultural insurance?
INFLUENCE OF STAKEHOLDER ON THE USE OF AGRICULTURE INSURANCE
AMONG SMAL SCALE FARMERS
37) Do the farmer groups affect the uptake of Agriculture insurance cover in your Wakiso
district? (1) Yes (2) No (3) Not sure
38) Does the private sector affect the uptake of Agriculture insurance cover in your Wakiso
district? (1) Yes (2) No (3) Not sure
39) Does the nature insurance company issuing the policy affect agriculture insurance?
iii
40) Do long procedures in the acquisition of the policy on use of agriculture insurance?
41) Do high costs of insurance premiums affect use of agriculture insurance among small
scale farmers? (1) Yes (2) No (3) Not sure
42) Does the nature of insurance company issuing the policy affect use of agriculture
insurance among small scale farmers? (1) Yes (2) No (3) Not
sure
THE OUTCOME OF THE UPTAKE AND UTILIZATION OF AGRICULTURAL
INSURANCE FOR THE SMALL SCALE FARMERS
43) Does the Uptake of agricultural insurance increases small scale farmer’s income?
44) Does the Uptake of agricultural insurance increases small scale farmer’s yields?
45) Does the Uptake of agricultural insurance increases small scale farmer’s markets?
46) Does the Uptake of agricultural insurance increases small scale farmer’s livelihood?
47) Does the Uptake of agricultural insurance increases small scale farmer’s productivity?
Thanks for your time and cooperation.
iv
APPENDIX TWO: STRUCTURED INTERVIEW SCHEDULE FOR AGENCIES,
PERSONNEL/STAKEHOLDERS DEALING WITH AGRICULTURE INSURANCE
Dear Respondent,
I am Wanyana Sarah a student of of Makerere University pursuing a master’s degree of Art
(Sociology). I am currently conducting a study on “Uptake and utilization of agricultural
insurance in Uganda: a study of small scale farmers in Wakiso district”. You have been selected
as a suitable respondent in this study basing on the expertise in this area and portfolio. Your
contribution, opinion and experience will be highly appreciated.
BACKGROUND INFORMATION (TICK WHERE APPLICABLE)
Date of interview …………………………………….
Name of interviewer ……………………………………….
1. Parish ………………………………….
2. Village ………………………………………
3. Gender of respondent (1) Male (2) Female
4. Age of respondent ……………… years
5. Formal education level completed (1) Primary (2) O-level (3) A-level
(4) Tertiary/University (5) None
6. Marital status (1) Single (2) Married (3) Separated
(4) Widowed
INFLUENCE OF AWARENESS ON THE USE OF AGRICULTURE INSURANCE
1) What important role can you or your organization play in awareness & publicity of
agriculture insurance in Wakiso district?
2) What is the level of awareness of farmers on the available policies on Agriculture
insurance?
3) How do channels of distribution influence Agriculture insurance?
INFLUENCE OF SOCIO ECONOMIC FACTORS ON THE USE OF AGRICULTURE
INSURANCE
4) Which types of farming do you practice?
5) Explain how the socio-economic factors influence the use of Agriculture insurance
among farmers?
v
INFLUENCE OF STAKEHOLDER ON THE USE OF AGRICULTURE INSURANCE
AMONG FARMERS
6) How do the farmer groups affect the uptake of Agriculture insurance cover in your
Wakiso district?
7) How does the private sector affect the uptake of Agriculture insurance cover in your
Wakiso district?
8) How does the nature insurance company issuing the policy affect agriculture
insurance?
9) What important role can you or your organization play in awareness & publicity of
agriculture insurance?
10) ?
THE OUTCOME OF THE UPTAKE AND UTILIZATION OF AGRICULTURAL
INSURANCE FOR THE SMALL SCALE FARMERS
11) How does the outcome of small scale farmers affect utilization of agricultural
insurance
Thanks for your time and cooperation.
vi
APPENDIX THREE: DOCUMENT REVIEW CHECKLIST
i. Agric consortium on crops covered
ii. Agric consortium on animals covered
iii. Multi peril insurance cover document
Thanks for your time and cooperation
vii
APPENDIX SIX: KREJCIE AND MORGAN TABLE
viii

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UPTAKE AND UTILIZATION OF AGRICULTURAL INSURANCE IN UGANDA: A

STUDY OF SMALL SCALE FARMERS IN

A DISSERTATION SUBMITTED TO DEPARTMENT OF SOCIOLOGY AND

SIGN ……………………………………. DATE………………………………………

SIGN ……………………………………. DATE………………………………..

Thank you all and may God bless you abundantly

1.0 Background of the study

Awareness of small scale

Outcome of the uptake and

Figure 1.1: Uptake and Utilization of Agricultural Insurance

Crop insurance is referred to as an indemnity that provides financial compensation for

To increase insurance acceptability, farmer-driven product design should be fostered and

3.7.1.2. Documentary review

3.8.2 Interview Guide

3.8.3 Documentary review checklist

3.9.2 Reliability of the Instruments

3.10 Procedure of Data Collection

3.12 Ethical Considerations

3.13 Limitations and challenges

Figure 4.2: Gender of respondents

Source: Primary Data (2021).

Category Frequency Percentage

Category Frequency Percentage

Total 100 100

Source: Primary Data (2021)

Responses Frequency Percentage

4.2.7 Main agricultural enterprise

Source: Primary Data (2021)

4.2.8 Most important animal in your animal husbandry

Responses Frequency Percentage

Responses Frequency Percentages

Source: Primary Data (2021)

Through farmer meetings

Source: Primary Data (2021)

Responses Frequency Percentages

Source: Primary Data (2021)

Responses Frequency Percentages

Source: Primary Data (2021)

4.3.3 The role of the different stakeholders in implementation of agricultural insurance

Responses Frequency Percentages

Responses Frequency Percentages

Source: Primary Data (2021)

Responses Frequency Percentages

Responses Frequency Percentages

Responses Frequency Percentages

5.2.3 The role of the different stakeholders in implementation of agricultural insurance

5.5.3 The role of the different stakeholders in implementation of agricultural insurance

Providing agricultural insurance services based on public/private partnership model. Piloting of

5.7 Limitations of the study

5.8 Recommendations for Further Research

Buchanan, M. E. (2017). Methods of data collection. AORN Journal, 33(1), 43–62.

APPENDIX ONE: QUESTIONNAIRS FOR SMALL SCALE FARMERS

Thanks for your time and cooperation.

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