Structural factors affecting the crop insurance in Lithuanian family farms

Abstract

Previous studies have found that the high degree of yield variation of cereals, leguminous crops, rape and grain maize indicates high-risk in crop production in Lithuania. Simultaneously, empirical studies have found that the commercial crop insurance has minimized the crop-yield variability in value terms. However, only about one tenth of the crop area is insured in Lithuania nowadays. The aim of this study is to examine the structural factors for Lithuanian family farms using such risk management tool as government's partly subsidised crop insurance. During the process of the analysis such variables like soil productivity, farm size, insurable crop area proportion in the utilised agricultural area (UAA), the share of crops in the total agricultural production and the total revenue, crop production intensity, revenue level, cost level, farmers' age as well as other variables were linked with farmer's decision to acquire crop insurance products. Different types of family farms extracted and the importance of crop insurance as income stabilisation tool for those extracted farm types was measured. The empirical analysis performed involved modelling, which was based on extracted static types of farms and dynamic development of related variables from Lithuanian family farms. To complete empirical analysis FADN data of 2010 and 2015 from the reports of Lithuanian family farms were used.