Agriculture insurance scheme development, a welcome move by crop farmers

Talks of developing an agriculture insurance scheme for crop farmers are a step in the right direction. Given the fact that Fiji's tropical climate is very much prone to floods and cyclones and every year our poor crop farmers have to start over, calculated with the hefty loss they have already incurred, this should be a welcome move for them.

Thanks to the United Nations Food and Agriculture Organisation (FAO), it's now working with the Ministry of Agriculture and the Fiji Crop and Livestock Council, with the latter to develop a preliminary study into a product that can be sold to our farmers.

And should the study be complete, it could be available to our hardworking crop farmers to sign up for this special type of insurance come next year.

But one thing farmers should know is that the insurance is unlike conventional insurance but is an Index Linked Parametric Insurance.

A parametric insurance or parametric risk transfer is a type of insurance, reinsurance or risk transfer arrangement that does not indemnify the full loss for the protection buyer.

FAO wanted an insurance that goes straight to the farmer and insures the farmer's biological assets.

This insurance scheme is working in the Caribbean and India.

According to the FAO website, on January 13 the Government of India approved a new crop insurance scheme, named ‘'Pradhan Mantri Fasal Bima Yojana'' (PMFBY). It replaced the previous scheme, with better conditions for farmers.

Under the new scheme, Indian farmers will pay only two per cent of the premium fixed by insurance companies for summer Kharif food and oilseeds crops and 1.5 per cent for winter Rabi food and oilseeds crops, covering all cereals, millets, oilseeds and pulses.

For Fiji, Mr Cole said crops covered under the scheme are biological assets, covering all vegetables, fruits and rootcrops for commercial purpose.

The premium is yet to be decided and it depends on how much will be insured.

Therefore if the farmer only wants to insure for damages done during major disasters, then the premium will be less.

Fiji Crop and Livestock Council's chairperson said: “It will be very nice to insure every small event for every farmer in every part of the country but the reality is that this is very unaffordable.

“We have to be very careful how we choose what we insure and what we don't insure,” he said.

Since it is difficult to balance the risks, a symposium will be held soon where the industry will meet the Government, Reserve Bank of Fiji and the insurance industry to discuss these issues.

The Council is currently discussing with international insurance companies such as Willis Towers Watson in London and another global insurance company in Singapore.

Mr Cole said that Fiji is leading the region in the scheme. He has been asked by the Technical Centre for Agricultural and Rural Co-operation (CTA) in the Netherlands to look at six other countries in the region to see if they have the prerequisites for agriculture insurance. He added that the Government had announced in the National Budget 2018 that they would support the development of this product.