VietNamNet Bridge – Three years since Viet Nam started to introduce agro- insurance policies back in 2011, bottlenecks still remained and there was plenty of work to be done to protect farmers from natural disasters.

Farmers harvest flooded rice in the southern province of Long An's Tan Hung District. Public-private-partnerships will be promoted in argo-insurance to better protect farmers.

The assessment was made by Dang Kim Son, Director of the Institute of Policy and Strategy for Agriculture and Rural Development (IPSARDS), an affiliate of the Ministry of Agriculture and Rural Development (MARD).

Son was speaking at a national seminar on agro-insurance in the capital city on Wednesday.

"Though in recent years, agriculture has played a role as a mainstay of the national economy during difficult times, it has faced numerous risks due to natural disasters including floods, droughts and epidemics." Son said.

"Agro-insurance is a shield to protect and support farmers and help them overcome difficulties and challenges in agricultural production. One of the most effective measures would be to promote the public-private-partnership model in agro-insurance," Son added.

Son was full of praise for the government's efforts to limit the damage caused by Typhoon Haiyan last week.

Due to the impacts of climate change, powerful storms like that were likely to become more frequent, and Viet Nam's geographical location meant it was one of several countries in the world hit hardest by climate change, he said.

That's why the difficult task for the agriculture sector now is to help farmers to continue developing agricultural production while improving their product competitiveness inside and outside the country.

As a result, protecting farmers from the negative impacts of natural disasters has become ever more important, and agro- insurance can play an important role in helping farmers to overcome the difficulties and challenges left by natural disasters and epidemics.

Addressing the participants, Tran Thi Dieu Hang, head of the non-life insurance unit from the Insurance Supervision Authority Department under the Ministry of Finance, said the pilot project had been implemented in 20 provinces and cities, where crops, livestock and aqua culture had been insured.

Hang said that the Government had offered to pay 100 per cent of the premium for poor households; 90 per cent for near poor households and 60 per cent for others.

"By the end of August this year, nearly 317, 000 households were participating in the insurance scheme, and the total premium revenue had reached VND 339.6 trillion (US$16 billion) ," Hang said.

She conceded that over the past three years, the project faced many difficulties and challenges for a variety of reasons.

To start with, agro-insurance was a totally new concept that was being rolled out on a large scale across 20 provinces and cities nationwide. In addition, insurance companies had struggled to provide services or carry out risk assessments.

"In 2012, the domestic aquaculture industry was hit hard. As a result, insurance companies suffered substantial losses and were unable to sign reinsurance contracts in 2013," she said.

"To cope with the situation, MOF and MARD agreed to increase premiums and negotiate with companies so that they accepted reinsurance at 82.93 per cent liability to continue the pilot programme," Hang revealed.

Tran Cong Thang, project manager and director of the Strategy and Policy Research Division of IPSARD, said a certain amount of success had been recorded in the pilot project.

"This should encourage farmers to participate in future agro-insurance schemes," Thang said.

However, he agreed that difficulties remained and fresh challenges lay ahead, particularly the slow issuance of documents to implement the Prime Minister's Decision 315.

"Under the document, the pilot project was meant to run for three years, but we were delayed by 18 months, our implementation time was cut by half," Thang said.

He lamented the complicated claim procedures, particularly the certification for production practices, aquacultural practices and sampling for disease detection.

"In some cases, it took shrimp farmers in southern Bac Lieu Province 10 months to receive compensation," Thang cited.

From Thang's point of view, another factor that hindered the development of agro-insurance in Viet Nam was the loose alliance between the State, insurance companies and farmers.

He agreed that at present in Viet Nam, the public-private partnership had achieved some success in commodities such as in coffee, tea, vegetables, maize, soybean and financial groups.

It could be a good model for the agro-insurance industry too, Thang added.

Gonzalo Airiz Gervas, deputy director of the Public Agricultural Insurance entity in Spain, shared his country's experiences in the field, particularly with the PPP model.

He said that for the PPP model to work, the Government had to play a very important role in making sure there was transparency in public management.

In the context of climate change, the PPP model would help to alleviate the government's burden from damage caused by natural disasters. In their annual budget allocation, the Government should set aside a certain sum for agro- insurance.

Meanwhile, he said, private enterprises involved in agro- insurance would also play an important role by using their expertise in the field.

However, the farmers' participation was the most important thing because they were the key players in the game.

Alberto Garrido, director of the Research Centre for the Management of Agricultural and Environmental Risks at the Technical University of Madrid, said the PPP model was an effective option to make agro-insurance a success.

Based on international experience, Garrido listed the basic requirements for Viet Nam to start a PPP model.

They were adequate market regulations; a balanced institutional framework; accurate statistics on public private partnerships; solid actuarial techniques; a large pool of potentially interested farmers and starting off with simple insurance policies.

Source: VNS