Thu, Dec 08, 2011 - Page 8 News List

Agricultural insurance an option

By Du Yu 杜宇

After raising the subsidy for elderly farmers by NT$1,000, the government has come up with a long list of pork barrel policies. This includes relaxing the criteria on what constitutes an agricultural natural disaster, with the relief available for all categories of agricultural products being raised from 12.5 percent to 108 percent.

While this is good news for struggling farmers, many people are wondering if these policies shouldn’t perhaps have been implemented earlier — after the disaster wreaked by Typhoon Morakot in 2009 for example.

A more important question is where the funding will come from and whether it will leave future generations in debt. The Council of Agriculture has an annual budget of about NT$100 billion (US$3.3 billion), more than 70 percent of which is spent on subsidizing land fallowing, subsidies for elderly farmers, various agricultural materials, fertilizers and guaranteed-price purchasing. This crowds-out spending on other agricultural infrastructure, technological research and development, the establishment of a distribution system and international marketing.

Given these limited funds, how should the agricultural sector be restructured to enhance its competitiveness so it can deal with the competition if Taiwan opens up its domestic market. Is throwing money around really the best way to meet farmers’ needs and show government concern for farmers?

The nation has experienced a large number of natural disasters and as global warming increases, extreme weather events are likely to increase in frequency. This will not only threaten the safety of residents, it will have an even greater impact on crops, thus increasing the risk for farmers.

The US is a major agricultural producer and US farmers also face huge threats from natural disasters. To protect the interests of farmers and increase the industry’s competitiveness, the US established a relief system for natural disasters that impact agriculture, focused primarily on insurance and secondarily on relief, and made sure that it worked. This helps to limit the fluctuations in produce prices when disaster hits, and protects the interests of farmers and consumers alike.

China has also gone to great lengths to promote an agricultural insurance system. According to official Chinese data, the national agricultural insurance sector earned 13.57 billion yuan (NT$63.3 billion) at the end of last year. This money came from the farming, aquaculture, animal husbandry and forestry industries, making China’s agricultural insurance sector the second--largest in the world after the US and the largest in Asia. Last year, China’s agricultural insurance system covered 140 million farmers, with about 21 million farmers receiving compensation after natural disasters. During the same period, the insurance sector paid out a total of 2.7 billion yuan in compensation to those affected by floods.

In the event of disasters, insurance funds can be used to cover the costs of reconstruction, which means farmers do not have to rely on government support alone.

Agricultural insurance has become a major source of funding for farmers resuming production after natural disasters and in the reconstruction of affected areas. However, Taiwan is still discussing the introduction of an agricultural insurance system and agricultural agencies have shown a lack of willingness to put any major policies into practice.

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