As the country’s farmers and fisher folks carry the burden of ensuring that there is enough supply of rice and fish on every plate on the table for every Filipino household, the weight on their weary shoulders is second to none. The pressure is unenviable and it is continuously mounting. The agriculture sector fared less than expected in the first three months of the year, and the hope is that yearend forecast of 4 percent to 5 percent growth rate will still be met if palay (unmilled rice) production and the fishery industry will rebound come the second and third quarters. Of course, such prognosis depends again on the output of our hardworking but sadly-often-overlooked farmers and fisher folks. But what if, as is often the case in this tropical land, natural disasters strike? In a wink of an eye, all the harvests and haul would be gone. All the sweat and tears shed would be for naught. Economic targets will be changed but the real damage and pain will have to be borne by the same people who sacrificed much and strove hard to achieve them.
This is the reality. Agriculture is very much vulnerable to the unpredictability of nature. With agricultural production representing a major source of not only sustenance but also of livelihood for many Filipinos, the impact of natural disasters and other agricultural risks cannot be taken lightly. The need to safeguard the livelihood and interests of local farmers should be properly addressed.
Fortunately, rural bankers and the government stepped in to provide enough cushion not only to soften the blow when calamities hit, but also provide financial relief. The Rural Bankers Association of the Philippines (RBAP) and the Philippine Crop Insurance Corp. (PCIC) signed a memorandum of understanding (MOU) to offer agricultural insurance products and services that are responsive to the needs of the farmers, fisher folk and other agricultural stakeholders. The agreement supports the Department of Agriculture’s Food Staples Sufficiency Program (FSSP), which aims to uplift the lives of the small farmers and fisher folks and help accelerate the development of rural economy.
Under the MOU, RBAP committed to establish a tie-up with the PCIC to promote its agricultural insurance products and services, and facilitate cooperation and coordination between RBAP member-banks and PCIC regional offices for the benefit of RBAP member-banks’ farmer-clients. RBAP is likewise given the task of formulating policies that recognize the importance of agricultural insurance as a mechanism in helping manage risks in agricultural lending and investments. One of the undertakings of this MOU is the planned roadshow in select areas in all the three main island groups. Among the topics that will be discussed in these roadshows are agri-lending and agri-insurance for farming and fishing communities.
On the other hand, PCIC, which implements and manages the government program on agricultural insurance, committed to provide training and education to personnel of RBAP member-banks who opt to become insurance underwriters of PCIC and provide agricultural insurance products and services responsive to the needs of the RBAP member-banks, and farmers and fisher folk clients.
Reports have it that PCIC is also interested in adopting a microinsurance model for agriculture introduced by the German International Cooperation organization GIZ or the Deutsche Gesellschaft fur Internationale Zusammernarbeit. The German funding agency introduced the area-based yield insurance scheme for crop insurance, which potentially could result in huge savings for the government, and at the same time, protect farmers from losses. The scheme would result in faster payment of claims and better protection in the face of climate change.
As the term suggests, agriculture insurance provides insurance protection to agricultural producers against loss of crops, livestock and agricultural assets on account of natural calamities, plant pests and disease and other perils. More than this service, agricultural insurance is thought to have greater socio-economic relevance. The system targets to address not only the welfare aspect of the after-loss event, but also help in achieving the objective of stabilizing farm incomes more equitably. It also aims to reverse the risk-averse nature of farmers and motivate them to invest more on new technologies to help increase productivity.
The Department of Agriculture has long been working with rural banks to come up with measures to facilitate and improve access and sources of credit to the farmers and fisher folks. Agriculture Secretary Proceso Alcala had sought the rural bankers’ inputs and recommendations on crop insurance, government guarantees for agriculture-related loans and insurance, ability and readiness of the rural banks to lend to the agriculture sector, as well as funding sources from the rural banks for the agriculture sector.
Rural banks are more than willing to extend credit to the agriculture sector. In 2011, more than 50 percent of the rural banks’ loans were invested in the agri-agra sector. A little over 32 percent of its total loan portfolio is invested in the agriculture sector amounting to P35 billion.
Agricultural insurance is important in yield risk management owing to the unpredictability of nature and the constant threat posed by pests and crop diseases. However, because of the inherent low-income stature of small farmers and fisher folks, continuing government intervention and support from financial institutions like rural banks is needed to bring down insurance cost to their level of affordability.
If the agricultural insurance program is to survive and become operationally sustainable, efforts must be made to streamline the program’s operation and install a more aggressive marketing component. This is where rural banks, with its wide network of clientele from all over the country, will play a very crucial role.
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