A lifeline for Filipino farmers: Why a public-private agriculture insurance pool cannot wait

BY the time the next typhoon makes landfall, the question will not be whether Filipino farmers and fisherfolk will lose their crops, livestock and livelihoods — it will be how much, and who, if anyone, will help them recover. The Philippines has the unenviable distinction of being among the most disaster-prone countries on Earth, and our agriculture sector — already battered, undercapitalized and structurally fragile — sits squarely in the crosshairs. The proposed Public-Private Agriculture Co-Insurance Pool, advanced under the Department of Agriculture and World Bank’s PRIME Project, is not merely a technical reform. It is, plainly, a national imperative.

Consider the convergence of pressures bearing down on Philippine agriculture today. Typhoons, floods, droughts and volcanic activity strike with a frequency and ferocity amplified by climate change. The Middle East crisis has driven up the cost of fuel and fertilizer, squeezing farmers whose margins were already thin. We are now the world’s largest importer of rice — a humbling status for a country whose civilization was built on it. We import fish from neighbors whose seas are smaller than ours. We even import salt. Each of these facts is a symptom of an agriculture sector that lacks the financial resilience to invest, recover and grow. And without insurance, recovery after each climatic shock becomes a slower, more painful and more incomplete affair.

The Philippine Crop Insurance Corp. (PCIC) has carried this burden for over four decades, and its mandate to cover smallholder farmers remains essential. But the numbers tell their own story: Insurance penetration among rice farmers has historically hovered between 8 and 14 percent, and for corn, just 2 to 6 percent. The gap is widest precisely where the country needs coverage most — among the semicommercial and commercial farmers and fisherfolk whose productivity feeds the nation, and whose losses ripple through food prices and rural economies. PCIC alone cannot shoulder catastrophe risk at the scale climate change now demands. Nor should it have to.

This is where the proposed co-insurance pool changes the equation. By bringing PCIC together with private nonlife insurers — under a shared management structure organized in coordination with the Philippine Insurers and Reinsurers Association — the pool combines public sector experience and farmer reach with private sector capital, technology and access to international reinsurance markets. The model is not experimental. Spain’s Agroseguro, Turkey’s Tarsim and Thailand’s TNCIS have all demonstrated that pooled public-private structures can deliver agricultural insurance at scale, with better products, lower costs and stronger catastrophe absorption than either sector could achieve alone.

The benefits are practical and immediate. Pooling allows insurers to share risk that would otherwise be unbearable individually, making it commercially viable for the private sector to enter a market it has long viewed as too volatile. It permits the development of modern products — parametric and area-yield index insurance, for instance — that pay out quickly when triggers are met, sparing farmers the agonizing wait for loss adjustment after a disaster. It pools data across PCIC and private participants, enabling more accurate pricing and better-designed products. And it achieves economies of scale in administration, ultimately translating into more affordable premiums for the very farmers we are trying to protect.

The Insurance Commission’s recently circulated draft amendments to the Regulatory Sandbox Framework for Piloting Agriculture Insurance contains amendments that streamline documentary requirements, formally recognize parametric and index-based products, and allow institutional intermediaries such as cooperatives, farmer associations and LGU-linked entities to distribute coverage. Together with PRIME’s first-loss claims fund, premium subsidies for targeted farmer segments and capacity-building investments, the architecture for a functioning, scalable pool is finally falling into place.

What remains is the will to execute — and to execute quickly. Five years of pilot, with a target of 750,000 insured semicommercial farmers and fisherfolk, is ambitious but achievable. Every season we delay is a season in which a typhoon, a flood or a drought will visit ruin on families which had no instrument to share that risk. Food security, rural poverty reduction and climate resilience are not parallel goals; they are the same goal, viewed from different angles, and agriculture insurance sits at their intersection.

The pool will not stop the storms. But it can ensure that when the storms come — and they will come — Filipino farmers are no longer left to absorb the loss alone. That, in a country like ours, is not a luxury. It is the floor.

Source: www.manilatimes.net