Providing farmers’ financial security
ASEAN public and private sectors join hands to raise awareness on disaster risk financing strategies and regional cross-sectoral collaboration in driving food security and sustainable development in agricultural sector.
Over 50 participants from government representatives in agriculture and insurance sectors of the 10 ASEAN Member States (AMS) together with private sector from insurance business recently met during a one day-and-a-half webinar.
Hosted by the German Development Cooperation (GIZ), and the Food, Agriculture and Forestry, together with the Finance Integration Divisions through the ASEAN Disaster Risk Financing and Insurance Programme , this webinar series is aimed at enhancing national and regional capacity to develop disaster risk financing strategies and regional cross-sector collaboration.
Disaster risk financing, particularly agriculture insurance, is seen as important tools for supporting small- holder farmers, which is regarded as the majority of the overall 590 million ASEAN population, to maintain financial security as well as sustainable livelihood and income despite facing extreme weather events such as floods, heatwaves, droughts, storms and pandemic diseases affecting their agricultural productivity and livelihood.
“Agriculture is a core sector of ASEAN. Livelihood and income of majority population in the region depend on agricultural production. However, our region is most vulnerable to extreme weather events and natural disasters. Therefore, agriculture insurance is an important risk management tool that reduces vulnerability of small-holder farmers and enables the sector to become resilient to production risks. At the same time national agriculture insurance schemes provide fiscal security to the government when natural disasters happen and help to efficiently allocate relief payments,” said Dr Pham Quang Minh, Assistant Director and Head of Food, Agriculture and Forestry Division (FAFD), ASEAN Secretariat.
In 2019, the overall paddy production in the ASEAN region was estimated at 221.62 million tonnes or 1.79 percent from 198.08 million tons in 2018. The agricultural sector accounts for more than 40% of GDP in Myanmar and Lao PDR alone. Over 60% of population in Cambodia and Lao PDR are also farmers.
Dr Anja Erlbeck, Project Director, GIZ, said the purpose of agricultural insurance programme is to protect agricultural assets and costs, invested in production, from the possible negative impact of certain perils, such as floods, drought, storm etc. The main function of insurance is to put the insured person back to the same property ownership and financial position as before the occurrence of the risk event. Agricultural insurance policies are purchased by the individual farmers though in some countries group policies can be found.
“Agricultural insurance protects farmers’ investments and ensures that, even when harvests fail, they still have sufficient financial resources to re-invest and cover basic household needs,” she said.
Farmers are equipped with financial mechanism enabling them to effectively reduce risk and vulnerability to poverty caused by natural disasters and climate hazards. The crop insurance programme also enables farmers to grow farm business and enhances the contribution of the agriculture sector to food security and the overall economic development, she said.
In the ASEAN region, crop insurance is still at different stages. Each ASEAN Member State is facing different challenges concerning policies and data availability among other issues. Awareness of government and related stakeholders of their roles and responsibilities is necessary to foster development, implementation and promotion of crop insurance at the national and regional levels. As the multi-stakeholder engagement is a participatory process to build trust and create transparency among the stakeholders, a regional webinar series is a platform for ASEAN Member States to connect and brainstorm their experiences and lessons learned through case studies and initiatives amid the COVID-19 crisis
“Multi-stakeholder collaboration and consultation is key to promote crop insurance policy. Each stakeholder has a role to play in developing and implementing insurance products that suits needs and meets challenges facing individual ASEAN Member State,” said Channtharong Suy, Vice President of Forte Insurance, Cambodia.
ASEAN crop insurance experts will reconvene next year to follow up on the following aspects:
- Coordination with ASEAN Secretariat: by utilising the existing coordination mechanism to promote crop insurance and related topics.
- Promote implementation of agriculture insurance within the region.
- Encourage political commitment at the regional level to support implementation of the agriculture insurance within ASEAN countries in order to seek consultation on the development drafted regional guideline on agricultural insurance
- Capacity building on the topic related to agriculture insurance. GIZ will continue to support on facilitating knowledge and capacity building session at both national and regional levels.