CHEA VANNAK
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| Agricultural insurance is being touted as the panacea to protect farmers against plummeting rice prices. Reuters |
Experts are pushing for agricultural insurance to be employed in the near future to help strengthen the agriculture sector, particularly the rice sector with its plummeting prices and limited access to foreign markets.
Sok Puthyvuth, president of the Cambodia Rice Federation (CRF), said on Friday that Cambodian farmers should have agricultural insurance as a tool to ensure a fair price for their products.
The agriculture sector needs insurance in the near future, he said, but issues in the sector need to be addressed prior to implementation.
“We need to have this insurance in the future,” he said. “But we don’t know how much an insurance package costs because the price depends on information, production situation and planting know-how. Also we have to check many other aspects to ensure the price is acceptable and can protect those [companies].”
The CRF and relevant parties have already discussed the possibility of establishing insurance services for agricultural products.
“We have discussed with relevant parties about this, but many risks have been found, so some banks and insurance companies don’t dare step in until they’ve collected enough information and have a clearer understanding,” Mr. Puthyvuth added.
“If they provide this insurance now, the price of insurance will be too high and won’t be acceptable.”
The push for agricultural insurance comes at the same time the Ministry of Agriculture, Forestry, and Fisheries is promoting contract farming with the aim of ensuring a price for farmers near market price.
According to the ministry, contract farming is a linkage between three parties including farmers or farmer communities, rice millers and provincial authorities.
Chandran Nair, CEO of the Hong Kong-based think tank Global Institute for Tomorrow which just completed a two-week study on rice in Cambodia, said it would be better if Cambodia had agricultural insurance.
However, he said insuring agricultural products was difficult and advised the implementation of contract farming ahead of insurance.
“Of course it is much better but it is not easy at the moment to get insurance companies to provide this,” Mr. Nair said. “But if you do contract farming and say you have 3,000 farmers together, then a large insurance company is willing to sell insurance products.” Related to agricultural insurance, there are NGOs and an insurance company already offering the service to the agriculture and sub-agriculture sectors.
Forte Insurance has offered insurance for agricultural products such as rubber, corn, cassava and rice in Battambang province since early 2015.
The Cambodian Center for Study and Development in Agriculture (CEDAC) introduced micro-insurance to help farmers. Under the scheme, farmers pay an insurance fee at the beginning of the growing season depending on land size and CEDAC provides technical consulting on planting. Insurance fees are returned if crops are damaged by drought or climate change.
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