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No need to await wipe-out of farms

No need to await wipe-out of farms

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No need to await wipe-out of farms

Topic |  
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As constant casualties of climate change, farmers need not wait for total wipe-out of their resources after every calamity before getting rescue from the government.

Third District Rep. Arthur Yap, as former agriculture secretary and now chair of the House Committee on Economic Affairs, pointed this out during yesterday’s Stakeholders’ Forum in Davao City organized by the United Nations Development Programme (UNDP) that this can be done through the Weather Index Based Insurance.

Yap lauded the UNDP, under its country director, Titon Mitra, WIBI Project Manager Israel Dela Cruz, Project Supervisor Yusuke Taishi and PCIC president Lawyer Jovy Bernabe for showing that Weather Index Based Insurance is realizable.

“The ability to pay out cash early, at different stages of an unfolding calamity, without having to wait for a total wipe-out, is what will give our farmers and our vulnerable poor, the chance to save what they can and prevent more losses and damages,” Yap said.

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He noted that time, up to today, “millions of farmers are just exposed to the ravages of climate change.

“With no real and expansive agricultural, property or life insurance protection, farmers just watch helplessly, as the weather comes to take away the sweat and tears of investments that farmers have planted,” he added.

“In the recently concluded TWG Hearing at the University of the Philippines last week, I asked Congresswoman Ria Vergara of Nueva Ecija what made her interested in Index Based Insurance.  She painfully recounted how this recurring and surreal reality of farm damages drove not a few of farmers in her district to commit suicide,” according to Yap.

He cited the practice in Africa where “pay-outs are what prevents farmers from selling their livestock and moving to cities”.

“By purchasing risk-insurance, nations can now shift disaster risk and associated economic, social and medical costs away from LGU’s and Governments to the global capital market.  In a case like this, the government can instead focus on disaster preparedness and a system for saving lives and distributing aid and pay-outs in times of calamities and disasters,” according to Yap.

Yap now asks the Senate to immediately file a counterpart bill to House Bill 3560 to allow the Philippine Crop Insurance Corp. (PCIC) to engage in index-based re-insurance and insurance and to be re-capitalized and supported for it.  

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Yap’s HB 3560 seeks for the over-haul of the crop insurance system of the Philippines by shifting the system to index based direct insurance and re-insurance policies.

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“This move will clearly signal to the private sector and capital markets that the Philippines is serious about this program to help our farmers, and secure food production in our country. We must also do a good job to promote a buy-in into this project with the Government, primarily the DA, the DAR, DENR and DOST-PAGASA, legislators, LGU heads, farm stakeholders, cooperatives, and mainstream finance entities.  The financial support for PAGASA’s various weather stations and capacity for satellite coverage will be indispensable to turning this program into a national reality,” Yap added. 

Yap explained that House Bill 3560 is aimed at mandating the PCIC and encourage private insurance companies to offer index based insurance as one of their products.

Index-based insurance is an innovative and technically-sound approach to manage risks especially for our poor and highly-vulnerable farmers in the Philippine rural countryside, Yap emphasized.

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“Unlike traditional crop insurance in which indemnity payments are linked to individual farmer yields and losses, index insurance links payments to independently established data such as local rainfall, wind speed, temperature, typhoons, cyclones, and historical yield data as trigger events to release payments and compensation to affected farmers and fisherfolks,” according to Yap.

Yap cited that in 2000, the Philippines signed its commitment to join the United Nations efforts at achieving the UN millennium development goals.

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Among its 17 avowed Sustainable Development Goals (SDGs) is to meet head-on and reduce significantly, hunger, poverty and ensure healthy lives and promote the well-being of its citizens. 

Yap also noted that in the Philippines, poverty, hunger, joblessness and under-employment are significantly rural phenomena intimately linked to each other.

“In a sector gravely reeling from the impact of under-investment in rural infrastructure, it is heartening to note that the government is set on spending significantly more on domestic infrastructure in the urban and rural settings,” Yap said.

From railways and bridges, to ports and irrigation facilities, the Duterte administration has declared the intention on sustaining the Philippines the momentum of the Gross Domestic Product (GDP) growth through government expenditures and finding the fiscal sources to bankroll these investments,” according to Yap.

“But considering that the Philippines is such a climate vulnerable nation, suffering dozens of tropical cyclones every year in a climate changed world, will these expenditure efforts be enough to meet the NEDA target of bringing down poverty from 21.6% today to 14% by 2022 and increase the Gross National Income from 3,500 USD to 4,100 USD in the same time?  In November 2013, we captured global attention as the “most storm exposed country on earth” as declared by Time Newsmagazine.  In terms of damages and costs, these destructive tropical typhoons and cyclones have resulted in at least 200 billion in agriculture crop damages, more than one hundred billion in infrastructure damages, about 100,000 totally destroyed homes, more than 700,000 partially destroyed homes, tens of thousands of deaths and hundreds of thousands of economic and social dislocations from 2010 to 2015,” Yap cited.

For the few farmers who actually understand and take out insurance coverage for their crops, the mode and indemnity based system of agricultural crop insurance is dismally outdated.

He said that the indemnity based insurance system that may work for other accidents is woefully wanting when applied to the agricultural setting and that the amount of pay-outs which is less than 15 percent of total damages in the sector speaks volumes of the inadequacy of agri-based insurance system in the Philippines today.

“The frustration is greater for all of us who are involved in this project when we know that in India, Mexico, Africa, and the Caribbean, farmers and even sovereign states, have risk transfer mechanisms and pay-out systems for their people that are working,” he cited.

He said that in India, millions of farmers are insured not only for crops wipe-outs but also for crop damages throughout the planting season.

This happens when changes in the weather, and water tables are beached and triggers payments to farmers so they have enough time to act right away to save their farm investments.

Farmers need not wait for the wipe out of their crops to get paid.  

In Mexico, LGUs are taking out index based insurance for their constituents and in Africa, the African Risk Capacity, which has for its members African countries, have banded together using sovereign funds to insure 160 million African farmers, against weather borne and related diseases, and damages due to drought, flooding and cyclones, Yap added.

“Just last week, on March 7, 2017, the African Risk Capacity and the African Development Bank partnered exactly for this purpose: to help strengthen African countries in planning and implementing timely and targeted responses to natural disasters thereby reducing the risk of loss and damage caused by extreme weather disturbances.  What was once a program for just five countries will now be ramped out to include the whole of Africa.  This is indeed stunning and welcome news,” according to Yap.

He further emphasized that with the Philippines’ chairmanship of ASEAN this year in time for the celebration of ASEAN’s 50 years, he hopes that the member countries can include as a project for regional cooperation sovereign risk insurance programs since ASIA produces the world’s rice which is consumed substantially by the world’s poor.

“We must be especially sensitive that any impact that would disrupt production and affect the livelihood of Asian farmers can add to tensions and instability resulting from food and income instabilities,” he added.

The stakeholders’ forum yesterday organized by the UNDP and the PCIC, it is evident that the project is not just a pipe-dream.

In fact, the project is initially covering 10 provinces in two Mindanao regions and it has insured close to 3,000 farmers and authorized actual pay-outs of more than a million pesos to 174 farmers for drought conditions.

This only shows that it can be done after-all, Yap said.

 

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