Farmers encouraged to buy insurance

Published: 01/09/2009 05:00

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Farmers in Tan Hung District in southern Long An Province harvest rice. Farmers could qualify for a 50 per cent iinsurance subsidy, according to a draft document from the State Bank of Viet Nam.

Farmers buying agricultural insurance could qualify for a 50 per cent subsidy, according to a draft document by the State Bank.

The proposal is designed to encourage more farmers to take out insurance policies.

Phung Ngoc Khanh, deputy head of the Insurance Department under the Ministry of Finance, said Vietnamese agriculture was prone to the effects of natural disasters and epidemics.

Natural disasters cost the country VND13 trillion ($722 million) last year. The Government covered just 10 per cent of the loss.

Farmers make up more than 70 per cent of the country’s population, and agricultural production generates 30 per cent of the country’s GDP. However, just 1 per cent of farmland is insured, according to the Ministry of Finance.

“Agriculture insurance is necessary for farmers if they are to be more responsible,” said Tang Minh Loc, deputy head of the Department for Co-operative and Rural Development under the Ministry of Agriculture and Rural Development.

The State Bank has also proposed that the maximum unguaranteed loan amount be raised to between VND50 million ($2,700) and VND500 million ($27,000). The current level is just VND10 million ($550). However, to qualify, farmers would have to show land-use right certificates.

No existing market

Deputy director of the Ministry of Finance’s Market and Pricing Research Institute Vu Dinh Anh said there was currently no market for agricultural insurance in Viet Nam.

Enterprises are not much interested in offering insurance to the agricultural sector because the risks are high, he said.

Meanwhile, farmers cannot afford to take out insurance because of the cost.

“I never thought of buying agricultural insurance. I hardly earn enough to feed my family as it is,” said Phan Van Viet, who owns a lychee plantation in northern Bac Giang Province.

Deputy general director of Agribank Insurance Company Nguyen Van Minh said that insurance companies could do little if farmers were not interested in taking out protection.

“The principle of insurance is that you take from the majority to compensate the minority who are affected by misfortune. But if only a few take part in the scheme, no insurance company would be able to afford to pay compensation,” Minh said.

Moreover, damage to agriculture from natural disasters is often huge, which means insurance fees are quite high. This would cause farmers many difficulties, he said.

However, some do not agree that the Government should support the industry.

“I think the Government should ensure that farmers’ products can be sold at profitable prices,” said Vo Tong Xuan, former rector of An Giang University in An Giang Province.

Truong Van Cung, a farmer in Dong Thap Muoi (the Plain of Reeds), said that farmers would not buy agriculture insurance, even if supported by the Government.

“We farmers earn little from our crops. Even when we want to buy health insurance for ourselves we have to consider it carefully, never mind agricultural insurance,” Cung said.

“I think it would be better if the Government supported farmers in finding markets for their goods,” he said.

VietNamNet/VNS

Provide by Vietnam Travel

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