Summary of doctor of finance banking thesis research on factors affecting the farmers intention to participate in rice insurance in the red river delta

In order to determine which factors affect the intention to participate in rice insurance, the author selected the topic "Research on factors affecting farmers' intention to participate

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INTRODUCTION

1 Rationale

Vietnam is an agricultural country with rice being its dominant crop Rice directly

contributes to national food security Over the past three decades, Vietnam's rice has been

known to the world through the nation's impressive rice export figures and this crop has

always been making a significant contribution to Vietnam's economic growth Although the

results achieved are great and remarkable, rice production has always faced many risks in

recent years, such as natural disasters, pests, and markets In order to mitigate the

consequences from the above risks for farmers, from 1982 to the end of 1983, the

Government piloted rice insurance in two districts including Vu Ban and Nam Ninh (former

Ha Nam Ninh), the company in charge of this type of insurance at that time was Bao Viet

The pilot program of rice insurance in this period was considered as unsuccessful by the

Ministry of Finance as only very few households participated in the program which was less

than 3% of the total households in the cultivated area (Pham Thi Dinh, 2013)

On March 1, 2011, the Prime Minister issued Decision No 315/QD-TTg on the pilot

provision of agricultural insurance during 2011-2013 Rice insurance was piloted in seven

provinces, in which two of them (Nam Dinh and Thai Binh) are located in the Red River

Delta The results of the pilot rice insurance in this period were quite successful, but there

were still many shortcomings After the provision ended, agricultural insurance in Vietnam

once again stalled By April 2018, the Government issued Decree 58/2018/ND-CP on

agricultural insurance and Decision No.22/2019/QD-TTg dated June 26, 2019 on

agricultural insurance assistance policies to encourage insurance companies to deploy mass

rice insurance nationwide However, the rice insurance situation in the Red River Delta in

particular and the whole country in general have not shown any further progress

Theoretically, rice insurance offers farmers many benefits, but in reality, the

Government and insurers have tried to promote this type of insurance many times but all

failed To develop rice insurance, a particularly important factor is the establishment of

farmers' intention to participate in insurance In order to determine which factors affect the

intention to participate in rice insurance, the author selected the topic "Research on factors

affecting farmers' intention to participate in rice insurance in the Red River Delta" to

propose solutions to promote the formation of intention to participate in rice insurance and

orientate towards the deployment of mass rice insurance in the future

2 Research objectives

2.1 General objectives

2 The dissertation aimed to identify the factors and their influence on farmers' intention

to participate in rice insurance in the Red River Delta and propose solutions to promote the formation of farmers' intention to participate in rice insurance

2.2 Specific objectives

- Systematize and establish a primary theoretical framework related to rice insurance

in particular and factors affecting farmers' intention to participate in rice insurance

- Analyze the current situation of rice insurance in the Red River Delta

- Identify the degree and direction of these factors' impacts on the farmers' intention

to participate in rice insurance in the Red River Delta

- Provide opinions, solutions and recommendations to promote farmers' participation

in rice insurance

3 Research questions

- What are the differences between traditional agricultural insurance and index insurance? What are the advantages and disadvantages of index insurance?

- Why is the demand for rice insurance in the Red River delta not high?

- Which theoretical model is the basis for the research of the dissertation?

- What factors affect farmers' intention to participate in rice insurance? Which factor has the greatest influence?

- What are solutions to motivate farmers to participate in rice insurance in the future?

4 Research scope and subject

- The research subject is the factors affecting farmers' intention to participate in rice insurance

- Research scope + In terms of content: The research studied factors affecting farmers' intention to participate in rice insurance including attitude, subjective norms, perceived behavioural control, communication, participation procedures and the Government’s insurance premium assistance policies

+ In terms of temporal aspects: The dissertation studied different periods during 2011-2018

+ In terms of spatial aspects: The dissertation surveyed and sampled in Thai Binh and Nam Dinh

5 Research methods

The research combined qualitative research with quantitative research, as well as used exploratory factor analysis, multivariate regression analysis to test the research model and hypothesis via SPSS 21.0 software

6 New contributions of the dissertation

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In terms of academic and theoretical aspects

The dissertation clarified the theoretical issues related to rice insurance, insurance

methods according to weather index Also the study clarified the current situation and

explained why farmers are not really interested in rice insurance Additionally, it

discovered the gaps in theory, reality and research methods, and selected the TPB model to

conduct the research

In terms of research results

Through the three elements of the TBP model, the dissertation proposed a model

consisting of six factors: attitude, subject norms, and perceived behavioral control,

communication, participation procedures and the Government’s fee assistance policies The

author offered viewpoints on the development of rice insurance and proposed solutions and

recommendations to promote farmers' intention to participate in rice insurance in the Red

River Delta in particular, and the nationwide development of rice insurance in general The

solutions are (1) The Government increased the insurance premium subsidy for farmers with

priority given to production households; (2) Strengthen the communication on rice

insurance; (3) Form a value chain of commodity rice production with insurers' participate;

(4) Provide financial support for the local implementation of rice insurance

6 Structure of the dissertation

In addition to the introduction, acknowledgments, lists of tables, references,

appendices, the dissertation was organized into five chapters as follows:

Chapter 1: Research overview and theoretical basis

Chapter 2: Methodology

Chapter 3: Scientific basis of rice insurance and factors affecting farmers' intention to

participate in rice insurance

Chapter 4: Analysis of factors affecting farmers' intention to participate in rice

insurance in the Red River Delta

Chapter 5: Perspectives on the development of rice insurance and solutions to

promote famers' participation in rice insurance in the Red River Delta

CHAPTER 1 RESEARCH OVERVIEW AND THEORETICAL BASIS

1.1 Research overview

1.1.1 Studies on agricultural insurance as an effective risk management tool in

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agricultural production

a In the world

Olivier Mahul (2005) affirmed that the role of insurance "is to compensate for losses caused by adverse weather and similar events beyond the grower's control".

Olivier Mahul and Charles J Stutley (2010), Olivier Mahul (2012) stated that

agricultural insurance is “an effective tool of the Government” with a positive role in

economic growth and poverty reduction The European Commission (2001) and OECD (2011) both considered agricultural insurance to be a very effective risk management and loss reduction tool

Myong Goo KANG (2007) affirmed that "Implementing the agricultural insurance program is necessary for farmers" and assessed the limitations of traditional insurance The index insurance can play an important role in managing natural and climate risks (FAO, 2011) Therefore, the implementation of agricultural insurance in a new direction is essential

Thus, all studies confirmed that in the risk management measures for farmers, insurance is the most active and effective one

b In Vietnam

Luyen Minh Duc (2012) claimed that analysis of agricultural insurance is an effective shield for farmers against risks in the production process GlobalAgRisk (2009) said that the Government should support in collecting data and calculating the indices that have impacts on the participation in agricultural insurance

Pham Thi Dinh (2010) and Nguyen Dinh Chinh (2011) pointed out that reinsurance, potentials and business strategies of insurers, farmers' perception and financial conditions are those factors that affect farmers' participation in agricultural insurance The policy system is incomplete, insurance products are not specific for each target group, which has a negative influence on the development of agricultural insurance (Pham Bao Duong, 2011) Relief policy after natural disasters has a negative correlation with the participation in agricultural insurance (Nguyen Ba Huan, 2014)

Hoang Trieu Huy, Phan Dinh Khoi (2015); Trieu Duc Hanh, Nguyen Thi Mao (2012) discovered that factors including production scale, household income, promotion methods

of agricultural insurance, and the government's support have a positive correlation with households' participation In addition, people's awareness, academic qualifications of the household head, production habits (Nguyen Thi Chinh, Phan Anh Tuan, 2013) affected farmers' demand to participate in agricultural insurance

1.1.2 Studies on the factors affecting farmers' decision to participate in agricultural insurance

a In the world

5 Smith and Baquet (1996) claimed that factors promoting insurance participation are

loans, education, and attitude towards risks He notably pointed that the premium does not

affect the decision to participate in insurance However, according to Shiva S Makki &

Agapi Somwaru (2001), the choice of insurance purchase depends on the premium, the

expected compensation, the level of risk and the availability of alternative risk management

tools Research by Ginder, Matthew G Spaulding & Aslihan D (2006) showed that

insurance premium is the most influencing factor in farmers' decision to participate in

insurance

Demographics and production are both influential (Bruce Sherrick, 2004), as the

older the age of farmers is, and the larger cultivated area is (Oyinbo O et al., 2013), farmers

are likely to participate in insurance According to Goodwin and Mishra (2006), the decision

to buy agricultural insurance also depends on age, academic qualifications, production scale,

financial characteristics, and communication In addition, Goodwin (1993) argued that the

two factors that most strongly affect the need to participate in agricultural insurance are

production area and total production costs

Barry et al (2004) showed a higher likelihood of participating in crop insurance for

older and large farms Research by Oynibo et al (2013) again showed that demographic and

factors related to access to agricultural extension and services do not affect the decision to

participate in agricultural insurance

Filip Branstrand and Fredrik Wester (2014) again claimed that society, age, education,

years of cultivation, production area have impacts on the demand for insurance Incentives for

farmers do not show any statistical significance towards the decision to participate in

insurance

b In Vietnam

Monte L Vandeveer (2001) when studying the demand to participate in insurance of

litchi farmers in Northern Vietnam discovered that productivity, history of damage, farmers'

perception have positive impacts on the demand to participate in insurance Pham Le Thong

(2013) claimed that the large cultivated area and high academic qualificationstend positively

influence the decision to buy insurance while manufacturing experience negatively affect

the decision In addition, households participating in insurance training program, having

eassy resource mobilization and high prices of finished rice tend to participate in rice

insurance (Hoang Trieu Huy, Phan Dinh Khoi, Phan Thi Anh Nguyet, 2014)

Phan Dinh Khoi and Quach Vu Hiep (2014) also argued that academic qualifications,

years of experience, training in agricultural engineering, insurance information, loans,

production area, production costs are the factors that affect the decision to participate in

agricultural insurance Luong Thi Ngoc Ha (2014) when studying households' willingness to

pay for agricultural insurance in Tien Du, Bac Ninh also concluded that factors affecting the

6 participation in rice insurance include the age of household owners, academic qualifications

of household owners, households' rice area, risk and income from agricultural production Nguyen Duy Chinh et al (2016) said that the farmers' tendency to participate in insurance have a negative correlation with insurance premium while rice area, experience in cultivation and productivity have a positive correlation with income diversity

1.1.3 Studies on factors affecting the intention to participate in insurance in general and rice insurance in particular

When studying the intention to participate in insurance, Nguyen Tien Dung et al (2015) discovered that five factors including attitude, subjective norms, perceived behavioral control, preventive measures, and the degree of tolerance for financial risk affect the intention of residents in Ho Chi Minh City in buying voluntary retirement insurance The study showed that the three factors including attitude, subjective norms, perceived behavioral control have positive impacts, and this result is consistent with studies applying TPB model In addition, preventive measures have positive impacts and the level of financial risk acceptance has negative impacts on people's intentions Nguyen Hoai Tram Anh (2017) listed the factors influencing the intention to buy insurance are purchase decision, benefits and reputation, barriers, services, savings, and family's opinions

When studying the intention to participate in voluntary social insurance, Nguyen Thi Nguyet Dung, Nguyen Thi Sinh (2019) combined the model TPB and TAM, and the results showed that there are four factors consisting of knowledge, communication, awareness of usefulness and income that affect labors' intention to participate in insurance Truong Thi Phuong, Nguyen Thi Hien (2013) pointed out there are six factors that affect the intention to participate in voluntary social insurance which are awareness, attitude, social impacts, knowledge, income and communication While Hoang Thu Thuy and Bui Hoang Minh Thu (2018) showed that five variables including understanding of policy, attitude towards participation, risk perception, participation procedures, ethics have influence on farmers' intention to participate, while communication and Influence from family factors do not

1.1.4 Research gaps

- Theoretical gaps: There have been no studies on the factors affecting farmers' intention to participate in rice insurance in the Red River Delta in particular and in Vietnam

in general

- The reality gap: Most of the studies only mentioned the agricultural insurance, but not the factors affecting the intention to participate in rice insurance Their contents are often presented only in descriptive statement of problems, and do not have the connection with the Red River Delta

- Gaps in research methods: Most studies applied the qualitative method to analyze, evaluate and provide preliminary judgments with orientation Some carried out the

7 quantitative method but their research objectives were completely different with those of the

dissertation In this study, the author combined both qualitative and quantitative methods to

evaluate the factors affecting farmers' intention to participate, offer solutions and

recommendations that encourage the participation in rice insurance, and they can be served

as a foundation for the development of rice insurance in the Red River Delta in particular

and the nation in general

1.2 Theoretical basis

1.2.1 Theory of intentions and purchase behavior

According to Ajzen (1991), “intentions are supposed to capture the motivational

factors that influence behavior, they show how much people try to be willing to try and how

much efforts they make to perform the behavior” Concurrently, according to Ajzen (2002),

intention is the intermediate premise of behavior On the other hand, behavioral economics

argued that the buying decision stems from many aspects, especially after the theory of

buying behavior was developed by Fishbein (1979); Ajzen (1985); Ajzen (2008); Fishbein

and Ajzen (2011) Buying behavior is influenced by factors such as subjective norms,

attitudes, beliefs and intentions (Ogenyi Ejye and Owusu-Frimpong, 2007; Omar, 2007;

Fletcher and Hastings, 1984; Hastings and Fletcher, 1983)

From the marketing point of view, Philip Kotler et al (2001) argued that consumers

score brands and from that form their purchase intentions/ According to the American

Marketing Association, customer behavior includes thoughts, feelings and actions they

perform in the course of using products Factors such as opinions from others, advertising,

price, product appearance can all affect the intentions and behavior of customers

Predicting human behavior is a fundamental goal of theories in the field of social

psychology Many theories have emerged to serve this purpose such as Theory of Reasoned

Action (TRA), Theory of Planned Behavior (TPB) and its development theories

1.2.2 Theory of Reasoned Action (TRA)

Theory of Reasoned Action (TRA) was built in 1967 by Fishbein After that, this

theory was further upgraded (Fishbein & Ajzen, 1975 and Ajzen & Fishbein, 1980) The

theory had been used extensively in research and was highly useful in predicting

different human behaviors (Madden, 1992)

TRA examines the relationships between beliefs, attitudes, intentions and behavior

In this theory, the intention is the factor that influences the behavior, in which the intention

is determined by one's attitude about the behavior and the subjective norms related to the

behavior

1.2.3 Theory of Planned Behavior (TPB)

Theory of Planned Behavior (TPB) is the development and improvement of TRA

(Ajzen & Fishbein, 1980; Fishbein & Ajzen, 1975) In addition to the two main factors

8 influencing intentions are attitudes and subjective norms, according to Ajzen (1991), the third factor affecting intentions is perceived behavioral control Does perceived behavioral control reflect easily or difficultly the performance of a behavior, and is it restricted? Many subsequent studies discovered that there is a relationship between perceived behavioral control and intentions (Armitage and Conner, 2001; Armitage, 2005; Fen and Sabaruddin, 2009; Shah Alam and Mohamed Sayuti, 2011)

1.2.4 Technology Acceptance Model (TAM)

TAM provides the basis for examining the impacts of external factors on a person's internal beliefs (Davis et al.) in product or service acceptance (Davis & Vankatest, 2000) According to Ajzen & Fishbein (1975, external impacts affect the attitude indirectly through one's beliefs

1.2.5 The model combining TPB and TAM

The model combining TPB and TAM was proposed by Taylor and Todd (1995) According to this model, a behavioral intention is influenced by three factors: (i) the individual's attitude towards a behavior; (ii) subjective norms or social pressure on the

individual's behavior; (iii) the individual's ability to control when performing behaviors

1.2.6 Theory of the connection among attitude, intentions and behaviors

Ajzen and Fishbein (2005) combined their research results in two models including TRA and TPB to produce a synthetic model studying impacts of attitude on behavior The model core is a series of causal effects that begin with the formation of behavioral beliefs, norms and control These beliefs are assumptions that affect attitude, subjective norms and perceived behavioral control, thereby create intentions and behaviors

1.2.7 Related models

Nguyen Thi Nguyet Dung and Nguyen Thi Sinh (2019) removed attitude from their model with the explanation that attitude could not be considered as a complete intermediary

to assess the impacts of perceived usefulness and perceived ease of use on behavioral intentions In addition, they added two elements including income and communication into the model While Hoang Thu Thuy and Bui Hoang Minh Thu (2018) applied the TRA model and the TPB model, adding the elements of communication, perceived risk, participation procedures and moral responsibility From these two models, it can be seen that the communication and participation procedures have impacts on people’s intention to participate, and this serves as the suggestion related to factors for the research model of the dissertation

Therefore, based on the research overview and theories of buying intentions of customers, the dissertation proposed the factors affecting farmers' intention to participate in rice insurance in the Red River Delta which include attitude, subjective norms, perceived behavioral control, and communication and participation procedures

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CHAPTER 2 METHODOLOGY

2.1 Research process

On the basis of the research model, the dissertation established a research process

consisting of six stages

Stage 1: Determine research objectives

Stage 2: Research the theoretical basis and previous studies

Stage 3: Qualitative research and investigation of insurance companies and farming

households

Stage 4: Quantitative research

Stage 5: Carry out Cronbach Alpha coefficients and exploratory factor analysis to

test the value of variables and evaluate the reliability of the official scale

Stage 6: Use multivariate regression to test research models and hypotheses

2.2 Research design

2.2.1 Qualitative research

Qualitative research was carried out using in-depth interviews with experts with the

following purpose:

- Examine and discover more independent variables affecting intention to participate

in rice insurance in the original theoretical model (formed on the basis of literature

overview)

- Modify the scale, through in-depth interviews, the author aimed to check whether

the investigated subject correctly understands the meaning of the scales or not, whether the

structure and words of the scale are easy to understand, easy to answer or not From there,

the scale will be modified before quantitative research is conducted

2.2.2 Quantitative research

+ In terms of insurance companies, the dissertation sent the survey questionnaire to

the non-life insurance enterprises in Vietnam, and the subject of the survey was leaders of

these firms

+ In terms of farming households: The survey carried out in Thai Binh and Nam

Dinh used the simple random sampling In each province, the author chose three districts, in

each district three communes were selected, in each commune the study chose three

villages, and in each village, 10 households were selected Therefore, the sample size was

540 households, which met the research conditions by Hair et al (1998) and Tabachnick &

Fidell (1991)

The tool used to run the model was SPSS 21.0 software

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2.3 Data and research methods

2.3.1 Research data

Secondary data

Descriptive statistics including comparison, classification, graph was used to analyze this type of data

Primary data

+ Data of farming households: the study surveyed 540 farming households in Thai Binh and Nam Dinh

+ Data of insurance companies: The author interviewed and surveyed experts from insurance enterprises

2.3.2 Research methods

Descriptive statistics

The dissertation used descriptive statistics to process data, analyze the results, and effectively deploy rice insurance in particular

Cronbach's Alpha

The dissertation examined the reliability of the score via Cronbach's Alpha coefficients with criteria: Cronbach's Alpha> = 0.6: Acceptable with new studies; Cronbach's Alpha from 0.7 to 0.8: Usable score; Cronbach's Alpha> 0.8: Good score

Exploratory factor analysis (EFA)

The study used factor loading as an indicator to ensure practical significance of EFA; KMO index demonstrated the suitability of EFA; Eigenvalue value represented the variation explained by one factor compared to the variation of all factors

Analysis of variance (ANOVA)

ANOVA was used to discover whether different attributes affect differently the intention to participate in rice insurance?

Regression analysis

The dissertation used the Binary Logistics regression model with the following equation:

Y= βo + β1X1 + β2X2 + β3X3 + β4X4 + β5 X5 + β6X6

In which:

+ The variable Y1 is the dependent variable representing farmers' intention to participate in rice insurance in the Red River Delta

+ X1, X2, X3, X4, X5, X6 are independent variables representing factors affecting the intention to participate in rice insurance

+ βo, β1, β3, β4, β5, β6, are the coefficients of the regression model

2.4 Establishment of models and scales

2.4.1 Establishment of research model

11 The study used the TPB model to conduct the research, the survey process was

carried out through two stages In stage 1, the author sent the questionnaire to the non-life

insurance companies in Vietnam and concurrently conducted in-depth interviews with 15

experts The purpose was to review the scales and determine that in addition to the three

factors in the TPB model, whether it is possible to include new factors including

communication on rice insurance, participation procedures, the Government's assistance

policies in the model In stage2, after identifying the possible factors, the research built the

questionnaire, investigated households to verify the impacts of these factors on their

intention to participate in rice insurance

The results of stage 1 showed that the independent variables that the dissertation

planned to include in the model can have influence on dependent variables Consequently

the author proposed the research model with six independent variables and 1adependent

variable as follows:

2.4.2 Establishment of research scale

To measure the variables, based on previous studies and survey results of insurers as

well as interviews with experts, the study established scales The scale used by the author

was the Likert scale with five levels of popularity from Totally disagree to Totally agree

2.4.3 Research hypotheses

There were six hypotheses given corresponding to these six following factors:

Attitude towards rice

insurance

Intention to participate

in rice insurance

Subjective norms

Perceived behavioral control

in participation in rice

insurance

Communication on rice

insurance

Participation procedures for

rice insurance

The Government's fee

assistance policies

H1

H2

H3

H4

H5

H6

12 H1: Attitude towards the participation in rice insurance has a positive correlation with the intention to participate in rice insurance

H2: Subjective norms have a positive correlation with intention to participate in rice insurance

H3: Perceived behavioral control has a positive correlation with the intention to participate

in rice insurance H4: Communication on rice insurance has a positive correlation with the intention to participate in rice insurance

H5: Participation procedures for rice insurance have a positive correlation with the intention to participate in rice insurance

H6: Insurance premium assistance policies have a positive correlation on the intention to participate in rice insurance

CHAPTER 3 SCIENTIFIC BASIS OF RICE INSURANCE AND FACTORS AFFECTING FARMERS' INTENTION TO PARTICIPATE IN RICE INSURANCE

3.1 Objective necessity and the role of rice insurance

3.1.1 Objective necessity 3.1.2 The role of rice insurance

3.2 Rice insurance

3.2.1 Insurance form

3.2.1.1 Based on the scope of insurance, it is possible to deploy rice insurance in two forms which are finite risk insurance and comprehensive insurance

a Finite risk insurance

b Comprehensive insurance

3.2.1.2 According to insurance methods, there are two types of insurance which traditional

insurance and index insurance

a Traditional insurance

b Rice insurance according to the index

3.2.2 Subject and scope of insurance

The insured subject of rice insurance is the yield harvested at the end of the season The insurance period is usually from the time of planting to the time the product is harvested

3.2.3 Insurable value and Sum Insured

13 Regarding rice, farmers buy insurance before each season, therefore insurable value

and sum insured are determined based on the average actual harvested output in the past few

years and the average price per unit of production in those years

3.2.4 Risk control, loss prevention and reduction

a Risk control

b Loss prevention and reduction

3.2.5 Inspection and compensation

Inspection is carried out to examine the causes and the extent of the loss And when

compensating, the insurer must pay attention to the compensation rate, the exemption level,

the salvage value

3.2.6 Prevention of rice insurance profiteering

In order to prevent profiteering in rice insurance, insurance terms and rules are

requires to be strictly constructed In addition, the communication should be strengthened,

so that farmers can see the long-term effects of insurance profiteering

3.2.7 Reinsurance in rice insurance

The arrangement of reinsurance is mandatory The purpose of rice reinsurance

arrangement is to protect the insurance company, and at the same time ensure benefits for

farmers

3.3 Farmers' intention to participate in rice insurance

3.3.1 Consumer behavior

According to the American Marketing Association, consumer behavior is the

interaction between environmental stimuli and human perception and behavior through

which people change their lives According to Phillip Kotker and Levy (2001), customer

behavior is specific behaviors of individuals when deciding to purchase, use or dispose

products or services Thus, customer behavior is the customers' whole process from the

moment they have a demand for certain goods or services until they choose to buy and use

these goods and services

3.3.2 Customers' intention and decisions

The stages in the buying process were introduced by Engel et al (1968)

Stage 1: Acknowledgement of demand

Stage 2: Research for information

Stage 3: Evaluation of options

Stage 4: Decision-making: Normally consumers decide to buy products according to

their intentions, but there are two factors that can influence them including others' attitudes

and unexpected factors of the situation

Stage 5: Post-purchase behavior

3.4 Factors affecting farmers' intention to participate in rice insurance

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3.4.1 Attitude

Attitude is a behavior that is defined as a "judgment of an individual about the results obtained from the performance of an act" (Ajzen, 1991), or "a person's general opinions about the disapproval of certain behaviors (Ajzen & Fishbein, 1980)

3.4.2 Subjective norms

Subjective norms are described as "one's perception of whether most of the individuals that are important to this individual think that person should or should not perform a certain behavior" (Ajzen & Fishbein, 1980) or is "the individual's perception of social pressures to perform or not perform a behavior" (Ajzen, 1991)

3.4.3 Perceived behavioral control

Perceived behavioral control is defined as "the individual's perception of how easy or difficult it is to perform a behavior" (Ajzen, 1991) Perceived behavioral control presents how easy or difficult an individual feels about the ability to perform a behavior

3.4.3 Communication

Communication is understood as the process of exchanging information, interacting with each other between two or more people, enhancing mutual understanding, and changing perceptions

3.4.5 Participation procedures

The participation procedures demonstrate the process of accessing and finding out relevant information of customers for the enterprise and its products

3.4.6 The Government’s fee assistance policies

The Government’s insurance premium assistance policies are the sponsorship of either part or the participants’ entire insurance premium The policy helps farmers reduce their financial burden when participating in insurance, and concurrently encourage them to have more confidence in the policy

3.3 Agricultural insurance in some countries and lessons for Vietnam

3.3.1 Agricultural insurance in some countries

3.3.1.1 In Spain

In Spain, there are three programs which are multi-risk damage insurance, productivity insurance based on geography, Productivity Insurance based private farms Premium subsidies are a key element in Span's policy The rate of subsidy for insurance premiums has varied significantly from 0.47% in 1998 to 0.58% in 2008 and the Government is the last reinsurance sponsor for insurance companies

3.3.1.2 In the US

The US government established the Federal Crop Insurance Corporation (FCIC) which is a 100% state-owned enterprise and is now regulated by the risk management agency (RMA) The United States is a country with a variety of insurance plans Multi-Peril

15 Crop Insurance has three programs including Catastrophe insurance (CAT), Buy-up

Coverage; Group insurance (GRP) Revenue Insurance consists of three programs which are

Income Protection, Crop Revenue Coverage (CRC), Revenue assurance (RA)

The US government provides assistance in many ways such as providing insurance

benefits, basic natural disaster yield insurance coverage for the entire crop area,

compensation assistance, administrative cost support for public Insurance companies and

the Government's acceptance of reinsurance

3.3.1.3 In India

India implements Compulsory Agricultural Insurance for borrowers Currently there

are these insurance plans as follows: Comprehensive Crop Insurance Scheme (CCIS);

National Agricultural Insurance Scheme (NAIS); Weather Based Crop Insurance Scheme

(WBCIS) National Crop Insurance Programme (NCIP) Small and medium-sized farming

households receive a 50% premium subsidy from the government and state government

(co-financing) Losses being more than 150% of the premium insurance will be compensated by

the Agricultural Relief Fund co-indemnified by the central government and state

governments at a 1: 1 ratio Besides, the Government also supports the management costs of

the program

3.3.1.4 In China

The China Insurance Regulatory Commission forms four insurance companies

specializing in agricultural insurance Local authorities in some provinces work closely with

PICC and CUPIC to develop and pilot a wide range of agricultural products and new

programs The Chinese government subsidizes about 35% of the insurance premium for

farmers, the provincial government subsidizes 25%, and the district government subsidizes

no less than 10% of the insurance premium for the farmers Thus, farmers only have to pay

about 10-30% of the insurance premium

3.3.1.5 In Japan

Japan is a typical country in building the National Mutual Insurance Federation of

Agricultural Cooperatives in three levels: national, provincial and village level Japanese

Agricultural Insurance relies on the cooperation of local farmers to establish a common

reserve fund by accumulating insurance premiums to minimize farmers' losses in case of

natural disasters The Japanese government sponsors about 50% of the premium and is the

ultimate reinsurer

3.3.2 Lessons for Vietnam

Firstly, rice insurance is designed as a commercial product that develops based on

the law of supply and demand Secondly, the State often sponsors agricultural insurance,

especially in the early stage of implementation Thirdly, the State combines state insurance

and other financial instruments and the State is the ultimate reinsurer for insurance

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enterprises Fourthly, it is essential to ensure the rule of majority in agricultural insurance Fifthly, most countries have conducted insurance nationwide, and concurrently provided a

number of mandatory groups to participate in insurance to limit adverse selection Sixthly, the State often creates a "push" for the agricultural insurance market Seventhly, product

design is simple, easy to understand, suitable with the needs and capabilities of farmers, and

it is necessary to combine traditional insurance with index insurance; in the long term, index

insurance should be focused on more Eighthly, the Government should select an

appropriate model for agricultural insurance implementation

CHAPTER 4 ANALYSIS OF FACTORS AFFECTING FARMERS' INTENTION TO PARTICIPATE

IN RICE INSURANCE IN THE RED RIVER DELTA

4.1 Natural and socio-economic conditions in the Red River Delta and the development of rice production

4.1.1 Natural conditions 4.1.2 Socio-economic conditions

4.2 The current situation of rice insurance in the Red River Delta

4.2.1 Before 2011

In 1982, the Government started implementing a pilot rice insurance program in Vu Ban and Nam Ninh districts (formerly Ha Nam Ninh province) The insurance company were assigned to implement rice insurance at that time was Bao Viet The pilot period was from 1982 to the end of 1983 In 1984, due to changes of the production method from the cooperative model to the household economic production model and a good harvest, most of farming households did not join rice crop insurance Therefore, since 1984, Bao Viet stopped the implementation

By 1993, Bao Viet re-deployed the rice insurance in 12 provinces Although these provinces are typical rice growing provinces, the covered areas accounted for only a small portion of the total cultivated area of the province Subsequent results showed that the main beneficiaries of insurance were farmers from the area being the most at-risk of damage, this contradictory situation caused many serious difficulties for Bao Viet (FAO, 1999)

However, the results achieved were not really meaningful, because the insured area only accounted for a very small part, therefore after two years the program was forced to stop because of huge losses

4.2.2 During 2011 - 2013

4.2.2.1 The basis for the implementation of rice insurance in the Red River Delta during

2011-2013

17

On March 1, 2011, the Prime Minister issued Decision 315/QD-TTg on pilot

implementation of agricultural insurance in 21 provinces and cities during 2011-2013; of

which seven provinces were piloting rice insurance The Government also stipulated two

insurance companies to carry out the pilot implementation, Bao Viet and Bao Minh

Concurrently, the Government also regulated the insurance premium assistance policy

according to the classification of farming households Since the promulgation of Decision

315/2011/QD-TTg, the Government and related ministries have continuously issued a series

of documents to guide the implementation

4.2.2.2 Evaluation of the current situation of rice insurance participation

As Decision 315/2011/QD-TTg was applied from July 1, 2011, then the spring crop

and the season were over, therefore in 2011 there was no rice insurance in the Red River

Delta By 2012 and 2013, the number of insured households and the insured rice area

increased in the three years of this pilot Although the rice cultivated area in 2013 decreased

compared to 2012, the rate of insurance participation was higher due to the increase in the

insured area In the three-year pilot, the structure of poor households participating in

agricultural insurance in these two provinces still accounted for the majority: 96.74% in

2012 and 94.84% in 2013 in Thai Binh; 95% in 2012 and 94.3% in 2013 in Nam Dinh In

2012, after the storm No 8, Bao Viet paid more than 2,690 billion VND to households in

Tien Hai district, Thai Thuy

4.2.3 During 2014 - 2019

Since Decision 315/2011 / QD-TTg expired in 2013, the basis for the implementation

of rice insurance by Bao Viet and Bao Minh was no longer the same as before, therefore

farmers' motivation to participate in rice insurance also disappeared

On April 18, 2018, the Government issued Decree 58/2018/ND-CP on agricultural

insurance This Decree provided policies to support agricultural insurance through the

support related to agricultural insurance premium for several insured agricultural production

organizations and individuals in some certain areas On June 26, 2019, the Prime Minister

issued Decision No 22/2019/QD-TTg on the implementation of policies to support

agricultural insurance including rice as the subject Fundamentally, the subsidy rate for rice

insurance premiums according to Decision No 22/2019/QD-TTg was lower than that in the

period of 2011 - 2013

Since Decision 315/2011 / QD-TTg expired until two new documents took effect,

rice insurance has not been deployed

4.2.4 Shortcomings and causes

Although the Government has issued many incentive policies, the results of pilot

agricultural insurance still have some limitations such as: The insurance coverage area was

not large, the number of farming households participating in agricultural insurance was

18 small, and most of them are poor farming households Insurance businesses are still not really interested in the implementation of rice insurance

Causes of the shortcomings

1) In terms of farmers: Firstly, farmers' awareness of risk management and insurance was low Secondly, their financial capacity to participate in insurance was limited Thirdly, the scale of rice production was small and fragmented Fourthly, rice production was mainly based on experience Fifthly, the mindset of relying on financial support mechanism from

the State was still popular

2) In terms of insurance companies: Firstly, insurance companies shared a common

perception that rice has high risks, the frequency of risks was quite high, and the

identification of nature and causes of risks was difficult Secondly, profits obtained from rice insurance were low Thirdly, insurers faced many difficulties in risk management Fourthly,

the extent of damage tended to exceed the financial capacity of insurance enterprises

Fifthly, insurers have not invested properly in human resources to implement agricultural insurance Sixthly, insurers were also unable to actively control the farming process

3) In terms of the State: Firstly, the Government has been focusing on supporting poor households Secondly, the period time for the pilot implementation was too short, and the scale was too large Thirdly, the State has not provided adequate support for communication Fourthly, the Government has not provided funding for implementation in local areas Fifthly, the State has not focused on investigation, research and forecasts and this led to a lack of databases to calculate premium and build insurance index Sixthly, there

is a lack of a mechanism for close and regular cooperation between insurance enterprises and local authorities and relevant sectors in the implementation of agricultural insurance

Seventhly, the Government did not actively participate in the rice insurance

4.3 Analysis of factors affecting farmers' intention to participate in rice insurance in the Red River Delta

4.3.1 Descriptive statistics of research samples

The dissertation surveyed 540 households in Nam Dinh, Thai Binh 426 of them were collected, 28 were invalid and 398 were eligible for analysis Specifically, there were 188 households in Nam Dinh province accounting for 47.2% and 210 households in Thai Binh province accounting for 52.8% of the survey sample There were 351 males accounting for 88.2%, and 47 women accounting for 11.8% The age of household owners ranged from 26

to 67 years old, of which most of household owners were from 40 to 50 years old Most of the households had monthly income from 5 to below 10 million dong There were 285 households who have participated in rice insurance, and only 113 households have not participated in rice insurance

4.3.2 Testing of the scales' reliability

19 Measurement variables were assessed their reliability through Cronbach's Alpha

coefficients The results of the correlation coefficients of each total variable with the

component measurement variables reached the value being greater than 0.3 Cronbach's

Alpha coefficients of all factors were greater than 0.7 Therefore, it can be concluded that

the scale of six independent variables (25 observed variables) and one dependent variable(5

observed variables) used in the study were appropriate and reliable

4.3.3 Exploratory factor analysis (EFA)

Before testing the values of the scales with EFA , the author examined whether the

data was eligible for analysis with KMO and Barlett's test The results showed that 25

observed variables satisfied all the conditions

4.3.4 Regression models and tests

4.3.4.1 Descriptive statistics of the variables

Based on the results of descriptive statistics of the variables in the model, it can be

seen that the mean of variables ranged from 4.1 to 4.4 This demonstrated that a large

number of people agreed with opinions about these variables The factor with the highest

consensus was communication, the factor with the least consensus was subjective norms

The mean value of intention to buy insurance variable was 4.31 which was greater than 4

This proved that the intention to buy rice insurance was relatively high among farmers

4.3.4.2 Analysis of correlation coefficients between variables

Peason coefficient test was used to test the linear relationship between independent

variables and dependent variables The correlation coefficient of independent variables with

dependent variables was relatively high, ranging from 0.609 to 0.743 Therefore, it can be

concluded that these variables were suitable for their inclusion in the explanatory model of

rice insurance In addition, the correlation coefficient between independent variables was

less than 0.8, so there was no sign of high multicollinearity in the model

4.3.4.3 Multi linear regression model

The multivariate linear regression equation showing the relationship of six factors

influencing farmers' to buy rice insurance has the following form:

YD = b0 + b1TD + b2CQ + b3NT + b4TT + b5HT + b6Ttu

In which, the independent variables were attitude (TD), subjective norms(CQ),

perceived behavioral control (NT), communication (TT) ), the Government’s insurance

premium (HT) and participation procedures (TTu) and the dependent variable was farmers'

intention to participate in rice insurance (YD)

According to the estimated results of the model: R Square = 0.613; therefore, the

independent variables in the model can explain 61.3% of the variation of the dependent

variable Sig coefficients of the independent variables including TD, NT, TT and HT in the

model were less than 0.05, so these independent variables were statistically significant at the

20 significance level of 5%, especially the two variables TD and HT had Sig <0.01 so these two variables were significant at the 1% statistical level Variable CQ had the rate of Sig = 0.152> 0.1 and variable TTu had the rate Sig = 0.564> 0.1, so the CQ and TTu variables were not statistically significant at the 10% and 5% level The F statistic value from the ANOVA was equal to 65,149, the value of Sig = 000, so the linear regression model was suitable for the data set and can be used

The relationship between the dependent variable and the independent variables was illustrated as a standardized regression equation as follows:

YD = 0.19*TD + 0.072*CQ + 0.111*NT + 0.136*TT + 0.301*HT +0.032*TTu Hence, according to the regression coefficients table, the independent variables all affected farmers' intention to buy rice insurance Additionally, all factors in the model were statistically significant and had a positive correlation with the intention to buy rice insurance, the regression coefficients b were all greater than 0 Therefore, the testing results

of hypotheses in the model all disapproved H0, approved H1, H2, H3, H4, H5 and H6 This proved attitude, subjective norms, perceived behavioural control, communication, the Government’s insurance premium assistance policies, the supply ability for rice insurance all had the positive correlation with farmers' intention to buy rice insurance The degree of impacts of six factors ranked in descending order was (1) the Government’s insurance premium assistance policies (standardized β was 301), (2) Attitude (standardized β was .190), (3) Communication (standardized β was 136), (4) Perceived behavioural control (standardized β was 111), (5) Subjective norms (standardized β was 072), (6) Participation procedures (standardized β was 032)

4.3.5 Analysis of variance (ANOVA)

4.3.5.1 Evaluation of differences in intention to participate between two groups of farmers who have never participated in rice insurance

The results of ANOVA showed the rate of Sig = 0.000 <0.05, therefore, at a confidence level of 95% demonstrated that the intention to participate in rice insurance between the two groups of households who have never participated in rice insurance was different Specifically, the average intention of the never-participating household group was 4.16, which was lower than the average intention of the group that has participated being 4.37

4.3.5.2 Evaluation of differences in intention to participate in rice insurance according to gender

The results of ANOVA showed the rate of Sig = 0.003 <0.05, therefore, at a 95% confidence level, the intention to participate in rice insurance differed between male and female household owners Specifically, the mean value of intention by female owners was higher than that of male owners In addition, it can be seen that the value