Reforms needed for crop insurance system

  • 4 May 2015, Monday

Source: The Manila Times
1 May 2015

IN the light of the challenges presented by climate change, a Southeast Asian-based agricultural research organization is pushing for reforms to be made to make more farmers consider insuring their crops.

This move for reforms is a result of a recent study spearheaded by Southeast Asian Regional Center for Graduate Study and Research in Agriculture (SEARCA) in Los Banos, Laguna in collaboration with the Philippine Rice Research Institute (PhilRice) based in Nueva Ecija province.

SEARCA researchers said their integrated report “Improving the Agricultural Insurance Program to Enhance Resilience to climate Change: Evidence from the Rice and Corn Production in the Philippines,” is being reviewed in preparation for its publication in a book.

They said this study aimed to analyze how good agricultural practices (GAP) adoption among rice and corn farmers could be implemented to complement the enhancement of agricultural insurance systems in the Philippines.

In the study, the rice component of the project was carried out by PhilRice, an agency under the Department of Agriculture (DA), while the corn component was spearheaded by SEARCA.

The researchers said the corn component aimed to identify existing and established GAP technologies and determine its applicability for crop insurance in the provinces of Isabela, Pangasinan and Bukidnon.

“The study concludes that with the promotion of GAP, the possibility of farmers availing insurance decreases. Most farmers acknowledge the use of recommended technologies as a scheme to cope with pest, disease damage, and natural calamities, thus GAP becomes a substitute for insurance as a risk management tool,” SEARCA researchers said.

The researchers also pointed out that the presence of moral hazard is also evident which means that corn insurance has a negative influence in the extent of GAP adoption. They said there is also information asymmetry, which causes to increase insurance premiums.