The public and private sectors of ASEAN have joined up to raise awareness on disaster risk financing strategies and regional cross-sectoral collaboration in driving food security and sustainable development in the agriculture sector.
More than 50 participants from the governments’ agricultural and insurance sectors of the 10 ASEAN Member States (AMS) together with private sector insurance businesses came together recently for a day-and-a-half webinar.
Hosted by GIZ, and the Food, Agriculture and Forestry Division in cooperation with the Finance Integration Division through the ASEAN Disaster Risk Financing and Insurance Programme, this webinar series is aimed at enhancing national and regional capacity to develop disaster risk financing strategies and regional cross-sector collaboration.
Disaster risk financing, particularly agriculture insurance, is seen as an important tool for supporting small-holder farmers, who form the majority of the 590-million ASEAN population, in maintaining financial security as well as sustainable livelihoods and incomes despite such extreme events as floods, heatwaves, droughts, storms and pandemics affecting their agricultural productivity and livelihoods.
“Agriculture is a core sector of ASEAN. The livelihoods and income of a majority of the population in the region depend on agricultural production. However, our region is most vulnerable to extreme weather events and natural disasters. Therefore, agriculture insurance is an important risk management tool that reduces the vulnerability of small-holder farmers and enables the sector to become resilient to production risks. At the same time, national agriculture insurance schemes provide fiscal security to the government when natural disasters happen and help to efficiently allocate relief payments,” said Dr Pham Quang Minh, Assistant Director and Head of Food, Agriculture and Forestry Division (FAFD), ASEAN Secretariat.
In 2017, the overall paddy production in the ASEAN region was 220.34 million tonnes. The agricultural sector accounts for more than 40 per cent of GDP in Myanmar and Lao PDR alone, while 60 per cent of the population in Cambodia and Lao PDR are farmers.
Dr Anja Erlbeck, Project Director, GIZ, said the purpose of the agricultural insurance programme is to protect agricultural assets and costs invested in production from the possible negative impact of certain perils, such as floods, drought, storms and more. The main function of insurance is to put the insured person back into the same property ownership and financial position as before the occurrence of the event. Agriculture insurance policies are purchased by individual farmers, although group policies can be found in some countries.
“Agriculture insurance protects farmers’ investments and ensures that even when harvests fail, they still have sufficient financial resources to re-invest and cover basic household needs,” said Dr Anja.
“Farmers are equipped with a financial mechanism enabling them to effectively reduce risk and vulnerability to poverty caused by natural disasters and climate hazards. The crop insurance programme also enables farmers to grow their farm business and enhances the contribution of the agriculture sector to food security and overall economic development,” she added.
In the ASEAN region, crop insurance is still at different stages. Each ASEAN Member State is facing different challenges concerning policies and data availability among other issues. Awareness among government and related stakeholders of their roles and responsibilities is necessary to foster development, implementation and promotion of crop insurance at the national and regional levels. As the multi-stakeholder engagement is a participatory process to build trust and create transparency among the stakeholders, a regional webinar series is a platform for ASEAN Member States to connect and brainstorm on their experiences and lessons learned through case studies and initiatives amid the COVID-19 crisis
“Multi-stakeholder collaboration and consultation are key to promoting the crop insurance policy. Each stakeholder has a role to play in developing and implementing insurance products that suit needs and meet the challenges facing individual ASEAN Member States,” said Channtharong Suy, Vice President of Forte Insurance, Cambodia.
ASEAN crop insurance experts will reconvene next year to follow up on the following aspects:
Coordination with ASEAN Secretariat: utilise the existing coordination mechanism to promote crop insurance and related topics.
Promote the implementation of agriculture insurance within the region.
Encourage political commitment at the regional level to support the implementation of agriculture insurance within ASEAN countries so as to seek consultation on the development of draft regional guidelines on agriculture insurance
Capacity building on the topic related to agriculture insurance. GIZ will continue to support facilitating knowledge and capacity building sessions at both national and regional levels.