DoF says no privatization for crop insurance firm
THE DEPARTMENT of Finance (DoF) said there are no current plans to privatize the Philippine Crop Insurance Corp. (PCIC), following fears expressed by farmers that premiums will rise if the government exits the industry.
“Privatization of PCIC is not being considered at this time. However, involving the private sector through tools such as reinsurance of agriculture risks will be explored,” Finance Secretary Carlos G. Dominguez III said Sunday, in response to a BusinessWorld query.
“Re-insurance will most likely allow the expansion of coverage to more farmers, more crops and livestock,” he added.
Federation of Free Farmers National Manager Raul Q. Montemayor said the government may be thinking of privatizing the PCIC after Executive Order (EO) No. 148, signed on Sept. 14, transferred the state-run crop insurance firm to the DoF from the Department of Agriculture (DA).
He cited DoF Undersecretary Gil S. Beltran’s remarks in May 2019, in which he first brought up the idea of privatizing the PCIC and convert it into a reinsurer.
The PCIC provides subsidized insurance protection to farmers against losses from natural disasters and plant and animal diseases, particularly for corn and rice.
“Without the subsidy, crop insurance will be prohibitively expensive, specially for small farmers… If the risk premium plus overhead costs are fully charged to clients, the premium will go up to 15% of the sum insured,” Mr. Montemayor said via Viber Friday.
The farmers group has maintained that EO 148 could make the insurer less responsive to the needs of farmers. It reconfigured the PCIC Board to make the Finance secretary chairman, relegating the Agriculture secretary to vice-chairman and reducing the number of farmer representatives on the board from three to one.
“The transfer of PCIC was done without any consultation with stakeholders. The DoF clearly has an anti-farmer bias, it does not want to consult the sector, and as with the Coco Levy, it does not want farmers meddling in its affairs. By reorganizing the PCIC Board, it has effectively changed the mandate and thrust of the PCIC as originally defined in its charter,” he said.
He maintains that the PCIC should still be mainly overseen by the DA for it to focus on its specific mandate to serve small farmers, rather than be run primarily as a financial institution.
“The DoF can be placed on the board to look after the financial health of the PCIC, but to place the PCIC under the DoF and to fill the Board with institutions that are under the supervision of the DoF smacks of overkill and is clearly a ploy to take full control of the agency,” Mr. Montemayor said.
Members of the board include the PCIC president, the Land Bank of the Philippines president, the Government Service Insurance System president and general manager, a private insurance industry representative, and a farmer representative.
In a Viber message last week, Finance Assistant Secretary Paola Sherina A. Alvarez said the transfer to the DoF was intended to ensure that the PCIC is “managed effectively for the benefit of the farming community.”
She said the PCIC will receive P4 billion in subsidies next year, but added that the government must ensure that taxpayer money is used “efficiently for the agriculture sector’s benefit.”