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PM introduces crop insurance programme
Viet Nam, an agricultural country with 70 per cent of its population living in rural areas, is taking a new step to support agricultural production with the publication of a draft of the Prime Minister's decision on farming insurance from 2011-13.
The Ministry of Finance last week released the draft decision, which would be effective during an experimental three-year period.
Under the plan, poor farming households will receive a subsidy of up to 100 per cent of the insurance premium. Support to other farming households will be 60 per cent. The percentage for agricultural production organisations will be 50 per cent.
According to the draft document, there are three main categories of cover, including cultivated crops (Rice), domestic animals (Buffalo, cows, pigs and poultry) and aquaculture (Tra and basa fish, black tiger shrimp and white-leg shrimp).
Under the programme, rice insurance will be offered in provinces of Nam Dinh, Thai Binh, Nghe An, Ha Tinh, Binh Thuan, An Giang and Dong Thap.
Meanwhile, insurance for pigs, buffalos, cows and fowls will be available in Bac Ninh, Nghe An, Dong Nai, Vinh Phuc, Hai Phong, Thanh Hoa, Binh Dinh, Binh Duong and Ha Noi.
Insurance for fish and shrimp hatchery will be provided in Ben Tre, Soc Trang, Tra Vinh, Bac Lieu and Ca Mau provinces.
There will be conditions for cover, for example, the household must feed at least 10 dairy cows or 50 meat head herd.
According to Phung Dac Loc, Secretary General of the Viet Nam Insurance Association, agriculture insurance premium value in Viet Nam is inconsiderable compared with the total non-life insurance figure.
The agricultural premium turnover in 2009 was VND1.7 billion dong, while total non-life insurance premium turnover was 13.6 trillion dong. The figures were VND958 million and VND8.2 trillion, respectively, in the first half of 2010.
There are many reasons behind the underdevelopment of agriculture insurance, which include the small scale of household farming, unexpected natural calamities and epidemic diseases that make the insurance too risky.
Due to high risks, insurance companies require high premiums that farmers cannot afford. Farmers, of course, find it difficult to calculate how much they can earn, which frightens them from spending money on insurance policies. Insurance management also adds to the cost.
French insurer Groupama arrived in Viet Nam in 2001 and provided insurance services for fowl breeding and shrimp and fish hatcheries in the Cuu Long (Mekong) Delta. But it was not successful, so they are providing insurance services to farms, rather than households, only.
Viet Nam Insurance Corporation (Bao Viet) has also failed in its efforts to tap this segment of the non-life insurance market.
According to Nguyen Duy Luong, Vice-President of the Viet Nam Farmers' Association, agricultural insurance has proved useful in many countries, where it often receives significant assistance from their governments, up to 50 per cent in the US.
Thuy Anh
vietnamnews
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