by Jennifer A. Ng / Reporte, via

For one reason or another, many Filipinos do not have insurance coverage. According to an insurer, only 13 percent of Pinoys have life or accident insurance. This is lamentable, said the insurer, as accidents could be financially catastrophic to families that can barely make both ends meet.

Local farmers are no different from many Filipinos who are not keen about having themselves insured. While crop insurance is available through state-run Philippine Crop Insurance Corp. (PCIC), many farmers have yet to avail themselves of crop insurance.

The PCIC revealed that of the millions of farmers all over the country, only 281,252 agricultural products and farm workers have been covered by insurance in the January-to-November period of 2012. Majority of the insured farmers, numbering 134,662, were rice and corn producers.

But with ill effects of climate change becoming the “new normal,” the PCIC hopes to change the mindset of farmers, particularly about crop insurance. The government hopes to do this via the rollout of a number of weather-based insurance products in two years.

Weather-based crop insurance

NORMAN CAJUCOM, PCIC acting senior vice president, disclosed that the government is currently collaborating with three international agencies—the International Labor Organization (ILO), the World Bank (WB) and the German Development Cooperation (GIZ) for the pilot testing of these insurance products in various parts of the country.

The government explored various options to expand the insurance scheme for farmers after typhoons Ondoy and Pedring hit the Philippines and destroyed large tracts planted to palay. The two typhoons destroyed a total of 1.38 million metric tons of palay in 2009.

Cajucom said the PCIC is collaborating with WB and the ILO for “weather-based index crop insurance.” This scheme is currently being tested by the PCIC with WB in Regions 2 and 6 and in Butuan with the help of the ILO. The PCIC is also pilot testing area-based yield index crop insurance in Tacloban.

“Farmers in the pilot sites have been receptive to the weather-based insurance products. They saw for themselves how these products could help them,” said Cajucom in a telephone interview.

He also said the tests will eventually cover all suitable sites in the country.

If all goes well, the PCIC, an attached agency of the Department of Agriculture (DA), will implement the plans during the latter part of next year or the early part of 2015.

The weather-based index crop-insurance scheme would rely largely on the rainfall report of the Philippine Atmospheric, Geophysical and Astronomical Services Administration. “If there is little or excessive rainfall, there would be an effect on crops. The weather-based index crop-insurance product will allow farmers to get compensation when there is very little or excessive rainfall.”

Under the area-based yield index insurance product being developed with GIZ, farmers would be compensated if their yield falls below the average. “Let’s say a palay farmer usually harvests 100 cavans per hectare. If this falls to 60 cavans during one season, then he would be compensated for it,” said Cajucom.

Insuring food supply

WEATHER-BASED insurance products involve palay and corn farmers since they make up the biggest number of farmers group in the country today. But Cajucom said there are also plans to develop similar insurance products for other high-value crops.

The PCIC official noted that based on initial feedback, farmers are attracted to the idea of getting immediate compensation for the losses they incur due to the changes in the weather. In the case of the weather-based index crop insurance, Cajucom said farmers are compensated within 48 hours.

“Traditionally, the government had to go to the farm of the affected farmer and to check the condition there. This can be cumbersome particularly if the government has to do this after a storm hits a particular area,” he said.

“With the weather-based insurance products, mas madali na [it would be faster] because we will just rely on scientific data,” Cajucom said.

The PCIC hopes that more farmers would be enticed to get insurance coverage for their crops.

Cajucom said the recent onslaught of Typhoon Pablo underscored the need for farmers, particularly in Mindanao to get crop-insurance coverage.

“Mindanao is not usually hit by storms but in recent years, it has been hit by strong typhoons. Look at what happened to the region when it got hit by Typhoon Pablo. The banana and coconut sectors were seriously affected. The farmers there really have to have insurance protection,” he said in a mix of English and Pilipino.

To expand crop-insurance coverage and fund the possible rollout of weather-based insurance products, the PCIC is now batting for a measure that would increase its capitalization, which is currently P2 billion; the agency is asking Congress to increase it to P10 billion.

The PCIC reported that from January to November 2012, it paid out P195.64 million to 27,369 farmers and farm workers. Rice and corn farmers constituted the bulk of the beneficiaries at 26,844 recipients. Insurance coverage produced last year amounted to P10.63 billion worth of policies, or 97.96 percent more than the same period of previous year.

In Photo: Norman Cajucom, PCIC acting senior vice president, said the recent onslaught of Typhoon Pablo underscored the need for farmers, particularly in Mindanao, to get crop-insurance coverage.

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