Assessing the moral hazard impact of mango farmers in Chabahar

Abstract

ABSTRACT-The agricultural sector encompasses activities that are exposed to diverse risks. Risks in the agricultural sector are unavoidable but manageable. Crop insurance is a management tool in the agricultural sector. Crop insurance is a strategy to cope with the production risks of the agricultural sector and to secure farmers' income in the future. Mango is a major horticultural and exporting crop in Sistan and Baluchestan province and in Chabahar with a key role in local economy. The present study aimed to use cross-sectional data of 2016-2017 for 285 mango farmers to explore the phenomenon of moral hazard and its economic consequences. Discriminant analysis and t-test were applied for economic modeling and data analysis. The results did not show any moral hazards in the insured group. So, we can improve the crop production and productivity by focusing on the role of the insurance. The determination of premium on the basis of the regional conditions and farmers' economic status can have desirable impacts on production.