Factors explaining producer perception towards weather index micro-insurance: Evidence from Kenya

Studies associate smallholders with negative attitudes towards index-based insurance within prisms of limited prodding the existing manifold risks. This article analyses perception of smallholder farmers towards weather index insurance amid common risks and coping strategies. The study was carried out in Embu County in Eastern Kenya using a sample of 401 smallholders obtained following a multistage sampling technique. The study established that the most important risks to the smallholder farmers include; drought, input costs and crop pests and diseases, while the least ranked risks in the same order of importance were excess rains, floods and frost. Similarly, the results reveal that the smallholder farmers ranked engagement in off-farm work, use of household savings and crop diversification as the most important strategies for coping with drought. In addition, borrowing from banks, food aid and stopping children from attending school were ranked as least important strategies. The findings do not strongly suggest a negative attitude towards weather index insurance among smallholders thus controverting hitherto studies that do not overly explain why? Furthermore the study postulates that other risks facing smallholder farmers and their risk responses disposition may distort and override farmers’ attitude towards weather index insurance. The Ordered probit model output revealed that the sex of the household head, size of the household, if a farmer experienced crop loss in the previous seasons, off-farm income, if a farmer received compensation/indemnity, the level of education of the household head, if the household head accessed credit, the years of farming experience and group membership had a significant influence on the perception of the smallholder farmers towards the effectiveness of weather index-based micro insurance scheme. We, therefore, recommend use of farmers’ perceptions as vital debut points for advanced research so as to enrich the emerging weather index insurance, dissemination of information and development of pragmatic index based policy frameworks.