Factors Affecting Crop Insurance Transaction Costs and Demand for Wheat, Barley and Potatoes in The Hamedan

Insurance of agricultural products is a financial instrument, which aims to minimize the instability caused by the damage caused by various and uncertain factors in the agricultural sector. The high cost of transaction in agricultural insurance reduces the tendency and acceptance of insurance by farmers.Therefore, the aim of this study is to measure the transaction cost and the factors affecting on it and estimate the demand for agricultural insurance in Hamadan province. The data used in this research are cross-sectional data that were collected in 243 questionnaires and 94-93 years from the farmers. In order to estimate the effective factors on the transaction cost, the linear method and the estimation of the factors affecting agricultural insurance were estimated using Logit model and Eviews software. The results of the calculations showed that the high cost of insurance for agricultural insurance was 25% to 30% of the total cost of insurance, which leads to a reduction in the number of individual insured. Also, the level of education, cultivation and damages had a positive and significant effect on the transaction cost. The education elasticity of demand for insurance is 0.86. The cultivation area and transaction cost have a negative effects on farmers' willingness to insure the product and by increasing in the cultivation area, the demand for insurance is reduced by -0.34 units.