Abstract:
The main objective of this study is to explore the feasibility of farmers‟
organizations as a vehicle for microinsurance delivery for paddy crop cultivated by
small-scale farmers in Sri Lanka to protect against risk of production loss caused by
natural disasters. Principal Components Analysis, a form of factor analysis is used to
elicit the capacity of farmers‟ organizations as a stakeholder of the insurance supply
chain using household level data from Ampara District in Sri Lanka. The results show
that the farmers‟ organization is most widespread and very close institutional setup for
paddy farmers. Farmers‟ organizations are capable of handling financial activities with
transparency, and have healthy financial habits and those farmers participate actively in
farmers‟ organization activities. This study provided clear policy insights into the design
of institutions channel that foster cooperation, and of the characteristics of farmers‟
organizations. To assist in the farmer organization‟s financial activities, the postal
network can act as financial intermediaries in circumstances where the microinsurers do
not have an outlet or branch networks in their target area. For developing the linkages
between farmers and microinsurers, the public-private partnership model can be used
for microinsurance supply to paddy farmers in Sri Lanka. In this context, multistakeholder
partnerships should be made imperative for paddy farmers‟ insurance
delivery aimed at widespread coverage or large-scale implementation.
