For:

From:
Date:
Re:
Topic:

CAV and RBT

Halmen (Committee on Agriculture and Food)
November 10, 2015
Proposed Agricultural Insurance Bill (CAV Version)
Agricultural Insurance in the Context of Climate Change
PART 1

INTRO

Note: This is an introduction to a series of briefing papers I intend to submit while

as I process the different information and data gathered.
1. Introduction
2. The need for a comprehensive agricultural
(#sagipsaka)
3. Performance Review of the PCIC
4. Why agricultural microinsurance will not suffice
5. Conflicting Laws and Policy Gaps
6. How to Engage the Private Sector
7. Policy Alternatives
8. Framework for the Proposed Bill

climate

change

policy

The Evolving Role of Agricultural Insurance

From substitute collateral to risk mitigating device
The PCIC was initially created for Land Bank to cater to CARP beneficiaries.
Originally, crop insurance only targets poor farmers since the intention of the law is
merely to give them access to socialized credit.
However, the relevance of agricultural insurance in the Philippine context has
evolved from its original inception from being just a mere substitute collateral to
give farmers access to credit.
Right now, agricultural insurance is an indispensable risk mitigating device in the
midst of climate change.
With the current and impending effects of climate change, a new law on
agricultural insurance is important, to protect the Philippine Agricultural
sector as a WHOLE. After all, the shocks brought by catastrophic loss are not only
felt by our subsistence farmers; it is also felt by small, medium, large, industrial and
even government farms and facilities.
What are Catastrophic Losses?

One or more related losses whose consequences are extremely harsh in

their severity, such as bankruptcy, total loss of assets, or loss of life.1
Catastrophic losses, such as typhoons (Yolanda, Lando, Rubi, Mario, Pablo etc.) do
not only affect the poor farmers, but the overall status of our food security due to its
adverse effects in general agricultural production. These typhoons have registered
at least a minimum loss of 1 billion in our agriculture sector. (Note, comparative
analysis will be supplied in the succeeding briefs).
In the Philippines where severe typhoons happen almost every year, it seems the
problem of catastrophic loss has become our new normal.
The concept of agricultural insurance then, should no longer be made to operate in
isolation; because in the context of climate change, it is agriculture insurance which
stands as the most resilient risk transfer mechanism.
The Current Crop Insurance System
At present, the Philippines crop insurance system has a penetration rate of only 1%
(harvested areas) while other agricultural-driven countries such as China and India
is at 30-40% (crop area). Currently under the RSBSA, (Registry System on the Basic
Sectors in Agriculture), we have 9.8 Million registered farmers, fishermen and
livestock growers. With Philippine Crop Insurance Corporations meager subsidy of
roughly 1 billion (2013), 1.1 billion (2014), and 1.2 billion (2015), only at 800,000
members under the RSBSA are covered, or less than 10% of target beneficiaries,
with the following coverage; ( 8% for palay, 3% for corn and 1% for others). 2
Therefore,
We have a huge GAP not only in our insurance supply to our basic sector in
agriculture with less than 10%, BUT it in our agricultural industry as a whole with
only 1% penetration rate.

Overview of Relevant Statistics: Our status as a climate change vulnerable

country3
According to Long-Term Climate Risk Index (CRI) from 1994-2013 (Countries
most affected by extreme weather events), the Philippines has been identified as
1 http://www.businessdictionary.com/definition/catastrophicloss.html#ixzz3r8v0KJvZ
2 Interview with SVP-PCIC Norman Cajucom, 2015, Philippine Crop Insurance
Corporation Office, NIA Quezon City
3 Germanwatch Think Tank and Research, 2015, Global Climate Risk Index 2015,
Who Suffers Most From Extreme Weather Events?, Germanwatch E.v., retrieved from
www.germanwatch.org

the fifth (5th) most affected country between 1994-2013 or within the 20-year
period;

CRI
199
4201
3
5

Country

CRI
Scor
e

Death toll

Philippines

19.5

933.85

Deaths
per
100,000
inhabita
nts
1.13

Total
losses in
million
US$ PPP
2786.28

Losses
per
unit
GDP in
%
0.74

/number
of Events
(total
19942013)
328

Countries affected most in 2013:

The Philippines ranked first (1st) most affected country in 2013, (Yolanda)
Followed by: Cambodia, India, Mexico, Pakistan
Exceptional catastrophes or continuous threats?
Exception to the Rule

The Philippines as

As a country that is struck by eight to nine typhoons per year and the victim of
exceptional catastrophes, namely Typhoon Haiyan, the Philippines suggest that a
new and remarkable classification of countries that fit both moulds may be
emerging.4
It seems, that the Philippines suffers continuous traditional threats and exceptional
catastrophes.

Thank you.

4 Germanwatch Think Tank and Research, 2015, Global Climate Risk Index 2015, Who
Suffers Most From Extreme Weather Events?, Germanwatch E.v., retrieved from
www.germanwatch.org