BusinessWorld Online: Deal expected to boost crop insurance

An agreement has been inked with the German government to develop a management information system in line with a possible crop insurance product for farmers, an official said.

“We are using a radar-based remote sensing technology to gather data from the fields, basically on the actual yield and the identification of harvest areas,” said Antonis N. Malagardis, program manager of GIZ’s micro insurance innovations program for social security.

Referred to was the P70-million agreement between the Department of Agriculture and the German Development Cooperation (Deutsche Gesellschaft fur Internationale Zusammenarbeit or GIZ).

“This information will then be used to craft an insurance product that will help rural farmers gain access to affordable agricultural insurance solutions,” said Mr. Malagardis during a media briefing on the signing of the memorandum of agreement on Monday.

Among the stakeholders in the project are the DA’s Philippine Crop Insurance Corp. (PCIC), International Rice Research Institute, Philippine Rice Research Institute and Philippine Insurers and Reinsurers Association (PIRA).

The project, said Mr. Malagardis, is the local component of a regional program by the GIZ called Remote Sensing-Based Information and Insurance for Crops in Emerging Economies (RIICE).

RIICE seeks to use satellite technology to gather information on agricultural production for the development of crop insurance policies to enhance income security of small farmers.

The program is in different stages of implementation in India, Thailand, Cambodia, Bangladesh and Vietnam.

PCIC President Jovy C. Bernabe said in the event that stakeholders had started a pilot program last year in Leyte.

“Our pilot program was based on data from various DA offices, like the Bureau of Agricultural Statistics and the National Irrigation Administration. Basically, we gathered historical data on rice production in the province to determine the average harvest in the area,” said Mr. Bernabe.

The proposed insurance product, he said, will be based on this average harvest amount.

“If, for example, a farmer gets his crops insured, and a calamity hits and his harvest falls below this average amount, then he can claim the discrepancy between his actual harvest and the average,” Mr. Bernabe explained.

Under the trial scheme, participating farmers can claim up to P10,000 per hectare under insurance.

The GIZ initiative, to run from this year until 2014, is expected to make the data gathering phase more efficient and accurate in a bid to spark the interest and confidence of private insurers.

“Private insurers now are still hesitant about entering into agricultural insurance because of the risky nature of the industry,” said Mr. Bernabe.

“Right now, the PCIC is covering less than 10% of our rural farmers. If this project is successful, perhaps we can tap private insurers to come in and adapt this insurance product so we can help more farmers,” he further explained.

In an earlier briefing in Leyte, Jimmy R. Loro, GIZ RIICE senior adviser-lead expert, said the agreement will maximize the opportunities from remote sensing technology to determine area yield for rice.

“The outputs from the rice information management system, namely the rice area estimates and the rice yield estimates, will be evaluated by the PCIC during the 2012, 2013 and 2014 rice cropping seasons to determine if they can be used to develop a crop insurance solution that improves upon existing insurance products,” Mr. Loro said.

The GIZ, supported by Swiss Development Corp., is investing 1.2 Swiss franc or about P54.96 million.

“There is no financial contribution from the Philippine government. What we require from participating agencies is the manpower and support in putting the technology in place. They will help us process the data and come up with results,” Mr. Loro added.

Nationwide expansion will be on 2014 after establishing the remote sensing technology.

“The new technology will replace the traditional scheme wherein PCIC insurers visit individual farms and measure actual crop damage before releasing insurance claims. Through satellite, we will be able to determine rice production in every cropping,” he explained.

The Philippines is the first of the 130 countries where GIZ is operating to use remote sensing technology for rice plantations. GIZ already employed the technology in India, Bangladesh, Thailand and Indonesia for other purposes.

By: Bettina Faye V. Roc and Sarwell Q. Meniano   To view the full article, please click the attached lnk below