Risk Management and Strategies for Increasing Participation in Dairy Cattle Insurance

Abstract

Rising risks in cattle farming threaten the sustainability of livestock businesses and national food security. This study analyzes risk perceptions, drivers of interest in purchasing livestock insurance, willingness to pay (WTP), and the association between intention to purchase livestock insurance and intention in business financing. Among 200 dairy farmers in Bogor and Bandung Regencies, the primary risks were high feed prices, climate change, and infectious diseases. Attitude was the strongest predictor of insurance interest, driven by institutional trust, premium subsidies, and risk perception. Interest in purchasing insurance was positively associated with interest in both profit-sharing financing and credit for business expansion. The average subsidized WTP was IDR 53,988 per head per year, while the non-subsidized WTP reached IDR 147,353 per head per year. Financial literacy negatively moderated the relationship between attitude and purchase interest; however, for small-scale farmers, it had a direct positive effect on purchase interest. The study recommends tailored insurance policies and adaptive communication strategies based on business scale and farmers' geographic and psychological risk profiles.