Investigating smallholder farmers’ willingness to adopt and pay for agricultural insurance policies in Osun State, Nigeria: a cragg’s double hurdle approach

Abstract Agricultural production is highly vulnerable to risks arising from climate variability, pests, diseases, and market uncertainties. Agricultural insurance serves as an important risk-management instrument; however, its uptake among smallholder farmers in Nigeria remains low. This study examined smallholder farmers’ willingness to adopt and pay for agricultural insurance policies in Osun State, Nigeria. A multistage sampling technique was used to select 240 respondents, and data were analysed using descriptive statistics and Cragg’s double hurdle model. The results showed that the average farmer was 50 years old, had 32 years of farming experience, and cultivated 1.65 hectares of farmland. While only 34% of respondents were aware of agricultural insurance, 31% belonged to cooperative societies. The first hurdle estimates revealed that age ( p < 0.05), education ( p < 0.01), marital status ( p < 0.10), farm size ( p < 0.01), and access to credit ( p < 0.05) significantly influenced farmers’ willingness to adopt agricultural insurance. The second hurdle results indicated that education ( p < 0.01), farm size ( p < 0.05), cooperative society membership ( p < 0.05), risk perception ( p < 0.01), and insurance awareness ( p < 0.01) significantly increased the intensity of willingness to pay. The study recommends strengthening awareness campaigns, cooperative-based extension services, and farmers’ access to education and credit to enhance agricultural insurance demand.