THE current crop insurance available for banana farmers is unsustainable due to its low coverage, according to a study released by the Philippine Institute for Development Studies (Pids).
In a study, titled Impact Evaluation of Banana Insurance Program of the Philippine Crop Insurance Corp. (PCIC) in the Davao Region, researchers found that only 55 percent of the cost of banana production is covered by the government’s crop insurance.
"PCIC insurance, at its present coverage level, is not sufficient to create impact on stabilizing income of banana farmers hit by shocks,” the study stated.
"Without the subsidy of the government, and status quo on coverage and premium rate, crop insurance in the country will not be sustained especially in the case of banana,” it added.
Apart from the low coverage, the PCIC insurance offering for banana growers has a low penetration rate among farmers due to lack of information.
The study said this may be due to the lack of PCIC personnel in the Davao region. The researchers found that PCIC only has 11 regular personnel and 25 job orders covering seven provinces in the region.
The researchers recommended that satellite offices must be created in municipalities to make crop insurance for banana farmers.
"It is encouraged to improve information and education campaign to encourage more farmers to avail [themselves] the insurance packages. Tarpaulin containing PCIC packages should be posted in strategic location in every MAO [Municipal Agriculture Office]/FITS [farmers’ information and technology services] Centers,” the study read.
The lack of information also affect the willingness of banana farmers to pay for the crop insurance.
The research found that on the average, for a maximum coverage of P300,000 per hectare, those willing to pay for crop insurance will only shell out P1,278.87, instead of the annual premium of P10,500.
Those who are not willing to pay P3,000 for the same maximum coverage are only willing to pay P421.19 annually.
"Willingness to pay of crop insurance premium for a maximum coverage of P300,000 per hectare is very low among banana farmers,” the study stated.
"The reliance of farmers to government subsidy entails a future problem on the sustainability of PCIC,” it added.
The insurance cover or sum insured for banana farmers are the cost of production inputs as agreed upon by PCIC and the insured.
This includes a portion of the value of the expected yield but it should not exceed 120 percent of the cost of production inputs.
The premium rate ranges from 2 percent to 7 percent of the total sum insured, subject to deductible and coinsurance provisions.
Those under the premium subsidy by the government automatically have a 3-percent premium rate.//
