Abstract

Weather Index-based Crop Insurance (WII) scheme have been introduced as an innovative way of mitigating downside risk effects, especially for smallholder farmers in developing countries.  The uptake and effectiveness of such a scheme, especially in Kenya is not well documented. A stratified random sampling procedure was employed to get a representative sample of 330 smallholder farm households. This paper uses a double hurdle model to establish factors influencing adoption and the eventual extent of uptake of a weather-based crop insurance, what in Kenya is referred to as Kilimo Salama meaning safe farming in English. The results show that, access to extension, perception and group membership had significant positive effects on adoption (at 1% level),  household head education level (at 5% level) whilst, adoption was negatively influenced by distance to agrovet and distance to the extension agent office (at 1% level), farming experience, age of household head and size of cultivated land (at 10% level). Distance to agrovet negatively influenced extent of adoption at 1% level while distance to extension agent together with farm size positively influenced the extent of adoption at 5 and 10% level respectively. To enhance participation by farmers in Kilimo Salama insurance scheme and consequently reduce production risks in their farming business, interventions that would enable farmers access to agricultural information, membership to groups, reduction of transaction costs and training farmers on benefits of an insurance scheme should be encouraged.

Key words: Kilimo Salama, adoption, double hurdle model, crop insurance, Kenya.