For the small-scale cotton farmers who work the fertile valleys surrounding Pisco, Peru, there is usually little time for games. Cotton is a labor- and cost-intensive crop, and despite their best efforts, they often suffer significant losses due to the elements and agricultural pests.
But small groups of these farmers have made time recently to play a game of chance. No ordinary pastime, this game was designed by a team of CALS agricultural economists to teach the value of crop insurance—an entirely unfamiliar concept in places such as rural Peru. And it may just be one step toward breaking the cycle of poverty that often rules subsistence crop farmers around the world.
The game simulates farming cotton, with each round representing a growing season. Before each round, farmers decide whether or not to borrow money from a bank and pay for crop insurance. A poker chip and a ping-pong ball are then drawn to represent weather and crop health. As they play, farmers learn how economic decisions can lead to debt or help them survive a succession of bad seasons.
“It takes farmers about 10 to 15 years in the game to become self-aware of their decision-making patterns,” says Michael Carter, a professor of agricultural and applied economics who is spearheading the project, part of a federal program to understand and alleviate rural poverty in developing nations. “After they get the idea of it, about 70 percent choose to buy insurance each year.”
But Carter’s project has also turned the game into reality. The professor has worked with banks and insurance companies to establish a micro-insurance program, which has began offering real-life policies to farmers in the region. If those policies result in higher incomes for farmers, Carter aims to bring the entire program—game and all—to other struggling economies around the world.This article was posted in Agriculture, Fall 2008, Field Notes and tagged Agricultural economics, Insurance, International, Latin America, Peru, poverty.