MOF moves up agriculture insurance programme

The Ministry of Finance has released the draft version of the Prime Minister’s decision on implementing agriculture insurance program in 2011-2013 on a trial basis.

This is really good news for both farmers and insurers. Though Vietnam is an agricultural country with 70 percent of its population in rural areas, agriculture insurance has not developed.

According to Phung Dac Loc, Secretary General of Vietnam Insurance Association, agriculture insurance premiums in Vietnam are inconsiderable compared with total non-life insurance premiums. The premiums in 2009 were modest at 1.7 billion dong, while total non-life insurance premiums were 13,644 billion dong. The figure was 958 million dong in the first half of 2010 vs. 8241 billion dong.

For a long time, insurers and experts have called for the Government’s support to help agriculture insurance develop in Vietnam and ensure profits for farmers.

One of the main points of the draft document is the provision that the State will subsidize 90-100 percent of insurance premiums for poor agriculture households to join the pilot agriculture insurance program. Meanwhile, those not listed as “poor households” will have 60-70 percent of their insurance premiums subsidized. Agriculture production organizations will have 50 percent of their insurance premiums covered.

The money to support agriculture households will be sourced from the state and local budgets.

Under the draft document, there are three main categories of coverage, including cultivated crop (rice), domestic animals (buffalo, cows, pigs and poultry) and aquaculture (tra and basa fish, black tiger shrimp and white leg shrimp).

Damages caused by natural calamities or epidemics will be prioritized for coverage.

The Ministry of Finance stressed that the program is very necessary to ensure social security in rural areas and help farmers repair damages caused by “acts of God.”

Deputy Chair of the Vietnam Farmers’ Association Nguyen Duy Luong explained that the insurance is very necessary and the association applauds the Government’s policy. Luong said that when farmers take out insurance, they will be able to ease risks from natural calamities and epidemics that happen regularly in Vietnam. Luong thinks that, in the immediate time, it is necessary to implement the program on a trial basis to learn lessons before the program is implemented on a massive scale.

Also, according to Luong, agriculture insurance policies have been applied in many European countries for a long time. In Southeast Asia, the same kind of plan has been carried out in the Philippines. These countries do not consider agriculture insurance as purely a business. These states get involved in the programs. In the US, for example, the government subsidizes up to 50 percent of insurance premiums.

Nguyen Huu Dung, Deputy Chair of the Vietnam Association of Seafood Exporters and Producers, remarked that it is a bit late for Vietnam, an agriculture country, to begin applying a program now.

“Agriculture insurance is very essential, especially for big scale agriculture production, such as tra and basa farming and shrimp hatchery,” Dung observed.

Dung expressed his concern about technical problems that may arise during the program’s implementation.-Nguoi lao dong

Tags: agriculture insurance