Total factor productivity change in broiler insurance: evidence from Iran.

Abstract

Insurance is one of the primary risk management tools in the agricultural sector. In Iran, the crop insurance fund operates as a quasi-government institution, and many agricultural insurance practices have remained traditional for years without necessary innovations. In 2016, managers of crop insurance fund decided to adopt a Negotiation-Oriented insurance approach for the first time in broiler industry. In this approach, all steps including the determination of insurance premiums were conducted through consultation and coordination with the broiler industry producers' union, rather than being dictated by government directives. This research analyzes changes in total factor productivity of broiler insurance before and after the implementation of this new approach, using the Malmquist index and Data Envelopment Analysis (DEA). Data were collected from the Iran crop Insurance fund's Comprehensive System (CS) for the period of 2010-2020. The results indicate that after the implementation of the negotiation-oriented method, total factor productivity of insurance in the broiler industry improved by 19.7% annually during 2016-2020.