engleski

Impact of trust on willingness to join Income stabilization tool

Farmers cope with different risks. Today, globally important are extreme weather events (drought, hail, frost, storm, …). Besides climate change, market uncertainty, political situation, and pandemics impact businesses. All risks in agriculture led to changes in farm income. Farmers respond to risks using on-farm and/or risk transfer strategies. Through Common Agricultural Policy (CAP) 2014-2020 European Commission introduced risk management strategies (RMS). RMS consists of three measures, subsidized agricultural insurance, mutual funds (MF), and income stabilization tool (IST). Subsidized agricultural insurance is applied widely, while IST is applied only in Italy. The income stabilization tool (IST) represents a strategy that helps farmers to cope with income risks. IST is also known as whole-farm insurance. The IST is a mutual fund in which farmers contribute an agreed amount of money and receive compensation when farm income drops more than 30% of the average annual income, or 20% in the situation of sector-specific IST (“Omnibus” regulation - EU Regulation 2393/2017). The average annual income is calculated according to the three-year or an Olympic average (five-year average excluding the highest and lowest year). The maximum compensation that farmers can get is 70% of lost income. In such types of funds trust among stakeholders is important. Trust means that farmers believe that (other farmers, policymakers, and insurance companies) have the right intentions to do what is expected of them. The objective of the paper is to measure how trust affects joining IST among Croatian farmers. Trust is measured by five-point Likert scale statements. Readiness to join IST is examined by the discrete choice experiment approach (DCE). DCE data is modelled by random utility theory. The main findings will discuss farmers’ preferences over IST. Additionally, research will discuss how trust impacts the IST choice. The main findings can show the general trust among farmers and help policymakers introduce an IST in Croatia and among EU farmers. According to our knowledge, the proposed research is the first attempt to investigate the trust of farmers and specifically for joining IST mutual fund.

income stabilization tool, discrete choice experiment, trust, grape growers, wine producers

Sudjelovanje na konferenciji Mutual Insurance Conference, Rim, Italija, 24.10.2022.