VietNamNet Bridge – The agricultural insurance market remains stagnant, despite the country’s large dependence on farming as part of its economy.

Fishermen check their lobster cages in Tho Quang Commune, Son Tra District, in the central city of Da Nang following a recent storm. High costs are keeping agricultural insurance out of reach for many farmers and fishermen, say industry experts.

Farmers make up more than 70 per cent of the country’s population and agricultural production generates 30 per cent of GDP, but only one per cent of livestock and cropland are insured, according to the Ministry of Finance.

The importance of acquiring such insurance was highlighted recently after the prolonged flooding of Ha Noi and provinces in the northern region.

Total agricultural losses amounted to VND6.316 trillion (US$382.4 million), according to local authorities.

At least 208,000 ha of subsidiary food crops and 28,000 ha of aquatic product farming were destroyed by heavy rains.

Every year, natural disasters, including tropical storms and hurricanes, hit Viet Nam’s shores, with farmers often suffering the worst.

In addition, viruses transmitted via farm animals, such as bird flu, foot-and-mouth and blue ear diseases have taken their toll in recent years.

Shrimp farms in the Cuu Long (Mekong) Delta have been hard hit by disease, and earlier this year, a cold spell led to the deaths of 10,000 buffaloes and cows and the loss of hundreds of ha of rice paddy.

Losses to agricultural production have equaled 5 per cent of national GDP annually in recent years.

Proposals

Bao Viet (Viet Nam Insurance Company) and the wholly French-owned Groupama Corporation pioneered agricultural insurance in Viet Nam in 1992.

At first, they offered insurance services covering cultivation, breeding, rice and other areas, but later had to cut back due to lack of demand from farmers.

The small-scale production and low income of farmers were also seen as high risks by insurers.

Even today, many insurers say that farmers do not follow professional cultivation methods, making it more difficult for companies to assess and control risk.

Farmers not only lack capital but also are not knowledgeable about modern production, food safety, vaccination, and breeding techniques.

Shrimp breeder Huynh Van Hung in Can Tho city said that when his stock was affected by disease, he could not understand the "complicated procedures" required by his insurance company.

Tran Vinh Duc, general director of Bao Minh Joint Stock Corporation, said his company offered insurance to rice farmers and a rice exporter but they both refused to sign a contract, fearing that the rice would be priced too high to sell overseas.

Nguyen Van Khang, deputy director of the Tien Giang Province’s Agriculture and Rural Development Department, said insurance companies’ and farmers’ interests were at odds.

Insurance companies prefer to insure crops and animals that see low risk, but farmers want coverage for high-risk ventures only.

According to Phung Dac Loc, general secretary of Viet Nam Insurance Association, no objective method to assess damage exists.

He said the state should intervene in the agricultural insurance market and devise a legal framework that would help promote the use of insurance.

Loc added that the Government should set aside part of the state budget for an agricultural insurance fund to partially subsidise farmers’ agricultural insurance fees.

(Source: Viet Nam News)