Small farmers continue to shy away from agri insurance

Indemnities provided by Philippine Crop Insurance Corp. (PCIC) to farmers affected by disasters have been significantly limited to those with large landholdings—a dilemma that stemmed from the lack of education among smallscale farmers.

A discussion paper published by the Philippine Institute for Development Studies (PIDS) last month, titled “Towards a More Inclusive Agricultural Insurance Program,” delved on the operations of the government’s lone agricultural insurance provider, which reflected that the lack of information dissemination among small-scale farmers had led to the concentration of indemnities to those with bigger lands.

Agricultural insurance aims to provide a safety net for farmers and fisherfolk from shocks that might affect their productivity. PIDS said this could have been particularly beneficial for the sector’s small farmers, which comprise 88.9 percent of farm holdings and 48.4 percent of the country’s
total farm area.

Based on PCIC’s penetration rate between 2015 and 2016, more than half or 66 percent of insured lands by PCIC ranged between 1 and 3 hectares (ha), while 12.5 percent were between 3 and 7 ha. The remaining 10 percent were composed of lands that were less than a hectare.

“Smallholder farmers usually do not have the appropriate information to be able to avail themselves of insurance … relative to producers with large farms, who not only have moremoneyto avail themselves of insurance, but who also stand to gain more in case of natural disasters,” PIDS said.

“This raises a problem as some case studies have shown that insurance can help smoothen the spending and credit access of smallholder farmers,” the think tank said.

Part of the challenges that small-scale farmers face were the lack of awareness not only about crop insurance program as a whole but also about the mechanics for availing it. Most farmers do not know how to file for insurance or how they can claim indemnity fees and benefits.

Also, some farmers decline to reach out to PCIC because they “do not trust the institution that offers the agricultural insurance.”

PCIC’s bridge of communication with its beneficiaries remains brittle, despite being around for 41 years. PIDS said these problems were closely tied to the corporation’s limited capitalization and manpower, but could be solved through an amendment in its decades-old charter.

“Expanding its role as a reinsurer for other companies that are willing to offer agricultural insurance… will lead to higher penetration rates while keeping prices at affordable and competitive levels,” the premier think tank said.

While there have been moves from both chambers of the Congress to change the corporation’s mandate, no bill has gained enough ground for it to take off. For now, PIDS recommended that PCIC expand its social media footprint, noting that children of farmers usually become their link to various programs offered by the public sector. —KARL R. OCAMPO