A few weeks have passed since the Chinese government’s announcement on Feb. 26 that is was suspending imports of pineapples from Taiwan on the grounds that harmful scale insects had been detected in some shipments of the fruit.
The authorities’ efforts to prevent farmers from losing all their income after laboriously planting and growing their crops would be far more effective if they took this incident as a cue to promote agricultural income insurance.
Under the Council of Agriculture’s policy of launching pilot schemes to popularize agricultural insurance, the Agricultural and Food Agency has so far drawn up the Regulations for Implementation and Subsidy of Sugar Apple Income Insurance Pilot Scheme (釋迦收入保險試辦及補助辦法), the Regulations for Implementation and Subsidy of Banana Income Insurance Pilot Scheme (香蕉收入保險試辦及補助辦法) and the Guidelines for Implementation and Subsidy of Agricultural Insurance Pilot Scheme (農產業保險試辦補助要點).
With regard to the agricultural and food industry, it has launched different types of insurance policies, including the first-loss insurance type for pear trees, banana plants and agricultural amenities; the type that is linked to the government relief system for pears and mangoes; the income guarantee type for sugar apples and bananas; the regional harvest type for rice, mangoes and pineapples; and the weather index type for pears, wax apples, papayas, pomeloes, persimmons, pomegranates, lychees, Indian jujubes and tankans.
The income guarantee type of insurance is one in which the insurer is obliged to pay out insurance benefits to farmers who plant the crops when they have losses due to weather conditions or changes in the market.
Take for example the detection of scale insects in the pineapple incident, unless China’s action is determined to be akin to an act of war, which would fall within the situations that are not covered by agricultural income insurance, then, according to the terms of the income insurance schemes that have been launched, farmers who have joined can all receive subsidy payments for the income they are guaranteed for each hectare of their land.
When income insurance for bananas was launched last year, some commentators raised doubts, and at present only sugar apples and bananas are eligible for income insurance.
Farmers, as insurance policy holders, pay insurance premiums, and the insurer bears the risk of losses arising from a possible fall in the price of specific crops. This reciprocal relationship between the insurance premiums paid by the insured and the risk borne by the insurer is indeed the purpose of establishing an agricultural insurance system, so of course there is no justification for denigrating such a concrete policy for stabilizing farmers’ incomes.
Faced with the possibility that China might suspend imports of Taiwanese agricultural products at any time, Taiwan should push agricultural income insurance. The authorities should also broaden the range of crops that are eligible for pilot schemes to bring into play insurance’s purpose as a system of risk management and loss-spreading.
This is the right way to tackle the problems that farmers face.
Lua Huan-sing is an attorney-at-law.
Translated by Julian Clegg
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