- By Maung Lu Aye
The crop insurance system is designed to cover damages to crops due to erratic weather conditions in the country. The government gave the green light to carry out the pilot project of crop insurance on 31 January 2018. This permit is not meant for running a crop insurance business but for research and experimentation.
Myanmar urgently needs a crop insurance system. This plan has been developing even during previous governments.
According to statistics, in 2012, about 400,000 acres of farmlands in Ayeyawady Region were damaged by flooding. Farmers are going into debt due to floods that come about every three years and there is no system for them to recover their losses as there is no crop insurance system.
Currently, farmers rely on agricultural loans. But a loan system coupled with crop insurance would provide more benefits to farmers. It is difficult for farmers to pay full premiums for crop insurance. The solution is probably some kind of government subsidy for crop insurance. It is also necessary to raise public awareness about insurance in areas at higher risk for natural disasters.
Similar programmes have been implemented in neighbouring Thailand and India. I would like to urge responsible bodies in our country to follow their example.
Agriculture is listed in ten prioritized sectors by Myanmar Investment Commission (MIC). However, it is time-consuming investment.
Agriculture investments have been rare because they are usually seen as long-term investments. Myanmar also has onerous requirements for foreign investments in land..
It was found that foreigners were keen to invest in agriculture but are wary of regulatory obstacles and other risks including erratic weather and pests. Crop insurance policy was largely unavailable in Myanmar. Inefficient land-use regulations, however, are the main obstacle to foreign investment in agriculture
Myanmar has approved a crop insurance scheme for smallholder farmers to assist them in facing agricultural challenges and fighting uncertainties
The programme is in line with Myanmar government’s ambitious plan to protect crop damages due to unpredictable weather conditions in the far-eastern Asian nation.
Yangon-based Global World Insurance is supporting Myanmar government in implementing the project on an experimental basis. The insurance scheme will include only paddy for the moment, extending in the region such as Yangon, Ayeyawady, Magwe and Mandalay.
According to the source, agriculture provides almost one-third of Myanmar’s GDP, representing one-fifth of the country’s exports to the international marketplaces.
The proposed crop insurance scheme, first time in Myanmar, is expected to boost development in the country’s paddy production, the cost of which is higher than the neighbouring countries. This is mainly because of the poor agricultural infrastructure and erratic weather conditions that led to severe crop damages.
A couple of years back, Myanmar’s close neighbour India announced to deploy satellites to digitally map each farmland in the country using GPS technology to offer yield-based crop insurance to farmers. Thailand also provides crop insurance to protect its farmers from agricultural damages.
The new crop insurance programme follows Myanmar’s Development Assistance Policy (DAP), which aims to effectively channel aid funds, provided by international agencies, to develop the country’s various sectors including agriculture.
Myanma Insurance was founded in 1952, providing 27 types of insurance. There is no insurance to cover the agricultural sector or crops. This will be a new challenge for the insurance industry.
Crop insurance will pay for any loss depending on the yield, according to the agreement made by both the parties. This means insurance will cover the loss if the yield is lower than the expected volume owing to erratic weather.
Neighbouring countries such as India and Thailand have been providing a crop insurance system for farmers since 1970. We developed the crop insurance scheme for the benefits of the farmers.
An insurance expert pointed out that there is no mathematician in the insurance sector in our country. Hence, to a premium rate, the sum insured (maximum amount payable) is calculated on the risk factor and the possible loss,
The premium rate may vary depending on crop varieties, growing season and regions. To achieve success in the crop insurance sector, multi-stakeholders, including officials, the insurer, the insurance buyer and related organisations, must make concerted efforts to achieve success in implementing the crops insurance system.
Translated by William Ko