Editor's note:

Although the Government has decided to pilot agricultural insurance for more than 10 years, every time a natural disaster strikes, thousands of farmers are left empty-handed, while insurance still seems to be a strange word to them. The article series "Making agricultural insurance a real lifesaver for farmers" by VietNamNet hopes to contribute another perspective to solve this problem.

Late but still have to do

According to Mr. Hoang Trung - Deputy Minister of Agriculture and Rural Development, storm No. 3 flooded 200,000 hectares of rice, causing damage of about 3,000 billion VND. With 50,612 hectares of crops flooded and 38,104 hectares of fruit trees damaged, causing damage of about 1,250 billion VND. Thousands of aquaculture cages were damaged and swept away, the initial estimated damage was up to 2,500 billion VND. Farmers raising livestock and poultry also suffered damage of nearly 2,000 billion VND.

These are estimated figures as of September 18.

As an agricultural country, natural disasters and epidemics annually cause losses to Vietnamese farmers estimated at 1.5% of GDP. Farmers need a guarantee for their achievements and labor, in which agricultural insurance is the hope and "salvation" for them.

Since 2011, the Prime Minister has issued Decision No. 315 on piloting agricultural insurance in the 2011-2013 period in 20 provinces and cities.

To implement the above policy, the Government issued Decree No. 58/2018 regulating agricultural insurance and Decision No. 13/2022 on implementing the agricultural insurance support policy.

Decree No. 58 provides quite comprehensive regulations on agricultural insurance and agricultural insurance support policies, emphasizing the participation of the entire political and social system and the role of enterprises and banks.

Agribank Insurance.jpg
A household that borrowed money from a bank suffered heavy damage caused by storm No. 3. Photo: Agribank.

Most recently, on September 16, Agribank Insurance Company (ABIC) and the Center for Supporting Farmers and Rural Areas (Vietnam Farmers' Union) signed a memorandum of understanding on strategic cooperation, marking an important first step in promoting agricultural insurance programs and sustainable rural development in Vietnam.

According to Vice President of the Vietnam Farmers' Association, Mr. Pham Tien Nam, rural agriculture is a field with many potential risks, and the consequences of the recent storm No. 3 are proof.

For example, in Van Don, Quang Ninh, where about 3,000 hectares of aquaculture were completely destroyed, the damage was extremely terrible.

“Compared to actual needs, this cooperation may be late, but for sustainable and long-term development, we must implement it. Step by step, do it well; do it from small to large; promote so that people understand and participate in insurance; research to have the most reasonable insurance plans and products,” said Mr. Pham Tien Nam.

In fact, Mr. Nguyen Tien Hai, Chairman of the Board of Directors of ABIC Insurance, commented that with 27 million Farmers' Association members, ABIC Insurance's customer base only reached about 3 million people - a very modest number.

W-aquaculture.jpg
Quang Ninh fishermen check their aquaculture cages after they were sunk by storm No. 3. Photo: Pham Cong

According to preliminary statistics, the total amount of damage to customers affected by storm No. 3 is about 40,000 billion VND; the amount that insurance companies have to pay is about 10,000 billion VND.

However, this figure is a general statistic for the entire non-life insurance industry. There are currently no specific statistics on the compensation level for the agricultural insurance sector.

With 95% of its customers being farmers, ABIC’s total compensation for customers affected by storm No. 3 is VND150 billion. Compared to the total damage, the level of participation in agricultural insurance is still too small, especially when ABIC is considered the most active insurance company in implementing agricultural insurance.

At Bao Viet Insurance, the agricultural insurance project implemented by the enterprise includes 3 products: rice crop insurance; livestock insurance and shrimp/fish insurance.

Within the scope of insurance for rice crops, the insurance will compensate customers for the decrease in rice yield caused by natural disasters and/or pests, diseases/epidemics during the insurance period.

For pet insurance, customers will be compensated in case the pet dies due to direct causes of natural disasters, epidemics, or destruction due to epidemics according to the decision of competent authorities.

For shrimp/fish insurance, customers will be compensated for shrimp/fish farming costs according to the compensation rate for losses due to the following direct causes: black tiger shrimp, pangasius/basa fish infected with diseases announced by relevant authorities; shrimp/fish die en masse and/or lose completely due to natural disasters announced by relevant authorities.

Insurance Procedures.jpg
Procedures and instructions for agricultural insurance claims. Source: Bao Viet.

There should be mandatory measures to buy agricultural insurance.

Decree 58 has emphasized the supporting role of insurance companies and banks. However, the reality is that banks have only implemented loan insurance packages, and customers pay to buy insurance for loan packages at banks.

In case the customer unfortunately encounters an accident during the loan period, the insurance company will support the customer to repay the loan.

According to Article 15 of Circular 39/2016 of the State Bank, the purchase of loan insurance by customers when borrowing capital is an agreement between the bank and the customer based on the voluntary basis between the two parties.

Talking to VietNamNet, a banking expert said that insurance is related to risk, while livestock, poultry, pets, and crops have high risks, so no one wants insurance.

“Insurance is a contract, the insurer has the right to require customers to take measures to avoid risks, but farmers will not care. If they buy it, when a risk occurs, the insurer will also find a way to refuse compensation, so the original meaning of insurance is lost,” he said.

Experts cite that 2-3 days before a storm hits, insurance companies will text or call customers to ask them to move their livestock to a safe place. But a large farm will have no way to quickly move hundreds, or even thousands of pigs to a safe place. When the storm and flood cause the pigs to die, the insurance company will refuse to pay compensation with the excuse "I told you but you didn't do it".

Not to mention, the provisions on barn hygiene, vaccination for pigs, animal feed must have clear origin, no growth stimulants, regular veterinary check-ups,... these regulations are difficult for any livestock farmer to meet.

According to experts, for banks to truly participate in agricultural insurance, administrative measures are needed. For example, regulations on preferential loan interest rates for businesses and farming households to buy agricultural insurance when borrowing capital from banks for livestock and crop farming.

“There should be a regulation requiring the purchase of agricultural insurance when borrowing from banks. Otherwise, every time there is a natural disaster or epidemic, we will petition the bank to support or even cancel the debt. How can this continue?” he said.

According to the Ministry of Finance, after 3 years of piloting agricultural insurance under Decision 315 of the Government, as of June 20, 2014, insurance compensation was 701.8 billion VND; of which, aquatic products were 669.5 billion VND (accounting for 95.4%), rice was 19 billion VND (accounting for 2.7%) and livestock was 13.3 billion VND (accounting for 1.9%).

The number of farming households and organizations participating in agricultural insurance in 3 years is 304,017 farming households and organizations.

In terms of insurance objects: 236,397 farming households and organizations participate in rice crop insurance. 60,133 farming households participate in livestock insurance, 7,487 farming households participate in aquatic insurance.

The total insured value in 3 years is nearly 7,748 billion VND, of which rice is 2,151 billion VND, livestock is more than 2,713 billion VND, and aquatic products is nearly 2,884 billion VND.

Trillions swept away by storm, where is agricultural insurance?

Trillions swept away by storm, where is agricultural insurance?

More than 2,500 billion VND is the estimated damage to 23,595 hectares of aquaculture due to storm No. 3. 22,808 livestock and more than 3 million poultry died... Farmers suffered thousands of billions in damage but most of them did not have insurance.
Exhausted after a fierce storm, cage owner is burdened with a debt of thousands of billions

Exhausted after a fierce storm, cage owner is burdened with a debt of thousands of billions

More than 300 grouper cages raised by Mr. Ba and his wife in the Quang Yen coastal area are nothing but broken wooden boards. After the storm and flood, not only Mr. Ba and his wife lost all their property, but many other farmers also had to shoulder a debt of thousands of billions of dong.