Philippines tries to expand insurance coverage for farmers as natural calamities take toll

CALAMBA, Philippines – The aftermath of Typhoon Haiyan in the Philippines has added urgency to finding a solution to a longstanding problem: less than 10 percent of farmers have crop insurance, and while its advantages are widely understood, few can afford it.

Raymundo dela Vina, an 81-year-old farmer in Laguna province near Manila, likened raising crops to betting in a lottery: you go against so many odds including pests and an average of 20 typhoons that pummel the country each year, flooding small rice paddies like his.    The country's 10.8 million farmers are the second poorest industry after fishermen. Many are tenant tillers who share their harvest with land owners and go into debt to pay for seeds, fertilizer and pest control. Crop insurance is the least of priorities when there is often not even enough money for food.

But the government wants to change that.

Officials and international aid groups are discussing ways to boost resilience to disasters after Haiyan, one of the strongest typhoons on record, killed more than 6,200 people and flattened towns in the central Philippines on Nov. 8. Better protections are vital for the poor who often end up deeper in poverty with every calamity.

A World Bank report estimated that natural calamities cut 0.8 percentage point from the country's economic growth rate each year on average. The proportion of people living in poverty in 2013 may have risen to 26.4 percent from 25.2 percent the previous year despite economic growth of more than 7 percent, according to a government report.

Government subsidized insurance that covers 30,000 pesos ($668) of a farmer's production cost per hectare each cropping season is a big help, farmer dela Vina said.

Jovy Bernabe, president of government-owned insurer Philippine Crop Insurance Corp., said the program is being expanded this year, with free policies to be given to 800,000 farmers in the 20 poorest provinces plus six provinces directly hit by Haiyan.

Last year, the agency enrolled for free 224,000 poor farmers who had become landowners under agrarian reform, raising the number insured to 750,000.

Expansion of the crop insurance program, private micro-insurance against calamites for families, and a proposed disaster risk insurance for towns pegged to measurable factors like rainfall volume are among mechanisms being implemented or studied to brace for future catastrophes.

In dela Vina's case, the crop insurance corporation subsidizes half of his premium. He pays about a third of the cost or 1,108 pesos ($25) per hectare through a farmers' cooperative while state-run Land Bank of the Philippines takes care of the balance.

About 12 percent of subsistence rice farmers now have crop insurance, a leap from two percent in 2009, Bernabe said. Numbers are lower for farmers planting other crops.

He said 750,000 enrollees is a "good number" compared with previous years.

Bernabe said the national government wants local government to jointly subsidize policies to bring down cost in areas where they are not free. It is also wants private insurance companies, farmers' cooperatives and rural banks to get involved.

"Without insurance you just leave everything to God because there are always disasters and your expected harvest could be totally wiped out," said dela Vina. It brings down risks, especially for tenant tillers who fall deeper into debt when they fail to harvest, the sprightly octogenarian said.

His 4-hectare (9.9-acre) farm near the rim of Laguna Lake had been under water since August last year, when another typhoon, Trami, coupled with heavy southwest monsoon rains and lake siltation caused severe flooding in Manila and nearby provinces. His insurance indemnified about a third of his 400,000 pesos ($9,000) losses. It's enough capital to plant again.

Last month, the flooding finally dried up after six months, and a young farm helper was guiding a water buffalo as it pulled a plow around dela Vina's farm to prepare for planting the next day. It was over two months late for December's cropping season.

In provinces on Haiyan's path including Samar, Eastern Samar and Leyte, however, coconut farmers will take longer to recover.

An estimated 33 million coconut trees were damaged or destroyed by the super typhoon's ferocious winds and tsunami-like storm surge, practically all of them uninsured. It will take at least six years for the coconut farms to return to full production.

Budget Secretary Butch Abad has said there will be substantial funds for crop insurance, microcredit and guarantees under the 2015 budget as part of moves to boost resilience to disasters.

For Anselmo Gecolea, a 73-year-old tenant farmer also from Laguna, insurance helps, but is not enough. High costs and shrinking earnings are making farmers like him desperate, he said.

The grandfather of 12 said his 1.5 hectare (3.7 acre) rice farm and vegetable plot are all he relies on for a living and almost nothing is left of earnings after deducting land rent, fertilizer cost and debt payment.

"So when I do not harvest when there is a typhoon, I really sink in debt" he said with a somber look on his weather-beaten face.