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Agriculture insurance vital to mitigate risks

Update: October, 10/2015 - 09:21
Farmers harvest rice in Kien Xuong District, Thai Binh Province. Agricultural insurance will not only help farmers cope with natural disasters, storms, floods, epidemics, but also contribute to a new rural development programme. — VNA/VNS Photo

HA NOI (VNS) — Agricultural insurance will not only help farmers cope with natural disasters, storms, floods, epidemics, but also contribute to a new rural development programme, officials said.

Le Duc Thinh, Deputy Director of the Department of Co-operatives and Rural Development under the Ministry of Agriculture and Rural Development, talked about the importance of risk management in agriculture through insurance at a workshop on Thursday.

He also said that the development of public-private partnership was a good way to bring about efficiency for agricultural insurance in Viet Nam. Farmers joining the programme was the most important thing, he said.

Although the agricultural sector has contributed to fighting poverty, improving food security and social stability, it was at risk to natural disasters like floods, droughts and epidemics.

Viet Nam has no clear framework on public-private agricultural insurance and a shortage of independent agencies to implement policies. This is why there are a lot of risks to implementing agricultural insurance, according to Thinh.

Reports from the Ministry of Finance say there are lots of obstacles to implementing agricultural insurance due to a large number of members and extremely wide coverage.

In addition, the claim process is slow. Many shrimp farmers had to wait for almost one year to get insurance payouts. Agricultural production has risks, therefore very few insurance companies invest in this sector.

Bui Thanh Hai, from Insurance supervision Authority under the Ministry of Finance, said 304,017 households and organisations in the agricultural sector had purchased insurance.

The total insured value was estimated at VND7.7 trillion (US$346 million) and the amount of agriculture insurance claim was at VND712 billion ($32 million).

The revenue collecting from insurance fees is about VND394 billion ($17.7 million) annually.

According to the Viet Nam Coffee and Cocoa Association, coffee output reduced by 30 per cent and 17 per cent on export value compared with the same period last year.

The reduction of coffee output was blamed on droughts and cold weather.

If they had agricultural insurance coffee growers who suffered losses would receive full compensation.

Tran Cong Thang, deputy director of the Institute of Policy and Strategy for Agriculture and Rural Development, said the project focused on reviewing the current Vietnamese agricultural insurance situation. Based on analysis, the project would make proposals on strengthening instituational capacities of related agencies on legal framework and design a public-private insurance model to cover weather risks in coffee production in Dak Lak and Lam Dong provinces.

Thang said agricultural insurance hadn't succeeded in the country due to a lack of co-operation between the state, insurance company and farmers.

The project,which began in July 2013 and finished in November this year, is sponsored by Spanish Agency for International Development Cooperation (AECID).

Recognising the importance of insurance to farmers, Thinh said, the Ministry of Finance had proposed the Prime Minister continue the implementation of pilot agriculture insurance programmes for rice and animals at all localities after the project finishes. — VNS

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