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Agriculture Insurance in the Philippines

Agriculture Insurance in the Philippines. Today’s Dilemmas.

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Agriculture Insurance in the Philippines

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  1. Agriculture Insurance in thePhilippines Today’s Dilemmas

  2. In practice, agricultural or crop insurance is really an adjunct to a whole set of risk management measures of which adequate farm management practices constitute the most important. Insurance by itself is no substitute for good production practice. The test of a good insurance programme is the cost versus the expected benefits and the sustainability thereof. • Diverse Objectives for Value Chain Analysis • Identify existing gaps and inefficiencies by analyzing cost structure of the system and seek ways to reduce these costs and increase productivity • To understand and improve the positions of certain stakeholders • Unlocking additional value in the supply chain

  3. | | | | | | | | | | | | | | AGRICULTURE Ex. RICE – PLANTING SEASON Planting Seedings Nurturing or Growing Harvesting Pests Excessive Pesticide Fire | | Irrigation CAT Perils (EQ, TYPHOON, FLOOD) Optional: on hillside plots Landslide Volcanic Eruption Near active volcanoes (to include volcanic ash damage, lahar, etc..

  4. | | | | | | | | | | | | | | | | TRANSPORT & WAREHOUSING RISKS Loading Unloading Storage Transit Storage Pests Fire CAT Perils (EQ, TYPHOON, FLOOD) Pilferage Hijacking Collapse of Bridge Overturning of vehicle Collision/Accident

  5. | | | | MARKET RISKS Storage Risks Display Risks Loss of Value | | Pests (wetting/heat) Fire CAT Perils (spillage/robbery)

  6. Single Peril Insurance… Yes • Multiple Peril… No • Private sector can deliver sustainable and actuarially fair • single peril insurance products but not multiple peril • products. • Examples: hail, rain, fire, wind • But single peril is not interesting to most resource limited • farmers. Poor farmers want yield and/or revenue • protection at an affordable price.

  7. Traditional Multiple Peril Insurance • Programs Unsustainable • • Moral Hazard • • Adverse Selection • • High Administration Costs • • Pricing Dilemma: Sound pricing would make it unaffordable. Subsidized pricing represents fiscal cost that worsens as national income levels fall and size of farm population rises.

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