Factors Affecting Smallholder Farmer’s Willingness to Insure in Multiperil Crop Insurance: Evidence from Baghelkhand Region of India

Abstract

Climate change severely threatens agricultural systems globally, with developing nations particularly vulnerable to adverse impacts. Multiperil crop insurance (MPCI), a key climate finance tool, has become a crucial agricultural risk mitigation strategy to combat its adverse effects. As climate change disproportionately affects farmers across different scales, this study focuses on the overlooked cohort of small, marginal and tribal (SMT) farmers in the Baghelkhand region of India, which is highly unexplored for such research. Departing from conventional climate finance perspectives, the study aims to understand the determinants influencing farmers’ participation in MPCI, particularly in the Pradhan Mantri Fasal Bima Yojana context. Using a logit model and surveys from 240 households, the study identifies new factors affecting MPCI adoption, including insurance-related variables. To deepen the analysis, semi-structured open-ended questions were also included to explore farmers’ perceptions and behaviours towards MPCI. Key factors influencing adoption include timeliness, liquidity, insurance history, coverage, awareness and premium ratings based on experience. In contrast, time constraints and limited coverage reduce participation. The study recommends creating tailor-made insurance products for SMT farmers and increasing awareness and outreach during critical cropping seasons to improve the programme’s effectiveness.