Key obstacles hinder farmers' adoption of agricultural insurance

Agricultural insurance will be challenging to implement effectively without the involvement of farmer groups and cooperatives.

Agricultural insurance is an effective risk management tool, including rice insurance, which serves not only as temporary support but as a "shield" to help farmers protect their assets and stabilize livelihoods against the impacts of disasters and epidemics.

In 2022, the Ministry of Agriculture and Environment advised the Prime Minister to issue Decision 150/QD-TTg, approving the Strategy for Sustainable Agricultural and Rural Development for the 2021-2030 period. This strategy includes a solution to develop and perfect breakthrough mechanisms and policies to apply and diversify agricultural insurance products broadly.

However, implementing agricultural insurance generally, and rice insurance specifically, in the Mekong Delta continues to face numerous challenges.

At a recent seminar titled "Challenges and Solutions for Rice Damage Insurance in the Mekong Delta” held in An Giang Province, Dinh Thi Hoa, from the Poverty Reduction and Social Security Department (under the Agency for Cooperative Economics and Rural Development, Ministry of Agriculture and Environment), stated that the current agricultural insurance support policy is being implemented under Decision 13/2022/QD-TTg, effective from May 9, 2022, and expiring on December 31, 2025.

Under this policy, five types of crops (rice, rubber, pepper, cashew, and coffee), three types of livestock (cattle, buffalo, and pig), and three types of aquaculture vannamei shrimp, black tiger shrimp, and Tra catfish) are supported in select localities. Yet, the current participation rate among farmers is modest, involving only about 16,700 households with insurance revenue barely reaching 278,000 USD (equivalent to less than 7 billion VND). Furthermore, insurance benefit payouts have only amounted to 7,920USD (equivalent to 198 million VND) for the two main groups: rice and cattle/buffalo. Agricultural insurance for aquaculture subjects has not yet been deployed. This data indicates that the scale and reach of agricultural insurance remain limited, proving genuinely unattractive to farmers.

Tran Van Soul, Director of Agribank's An Giang Branch, shared a similar view, noting that rice insurance was first offered by an insurance firm long ago (around 1990) but was later interrupted due to persistent problems in determining the extent of damage.

Ms. Hoa observed that one of the biggest bottlenecks is that the policy and orientation regarding agricultural insurance are inadequate concerning the types of crops, livestock, and diseases covered. Currently, policies supporting premiums and local implementation procedures primarily focus on assisting poor households, neglecting the needs of large-scale commodity production.

Furthermore, determining risk and the extent of damage remains difficult, as it relies on confirmation from specialized agencies and often does not adhere to standards regarding disease safety, food safety, and environmental protection.

One solution gaining recent attention is the strengthening of credit and agricultural insurance policies. For instance, Agribank's An Giang Branch offers a minimum 0.2% reduction in loan interest rates for farmers who participate in agricultural insurance, in line with Decision 150/QD-TTg.

Ms. Hoa also pointed out that the collective economic sector currently includes over 22,000 agricultural cooperatives and more than 34,000 farmer groups. Many cooperatives that have adopted digital technology, such as traceability, electronic logs, and accounting software, could become effective partners for insurance companies.

Therefore, implementing agricultural insurance through farmer groups and cooperatives would help reduce costs, increase farmer trust, and objectively support the monitoring and verification of losses.

In addition, attention must be paid to training local officials, cooperatives, and agricultural insurance company personnel on loss assessment and the application of technology in management.

The Director of Agribank's An Giang Branch also maintained that developing and expanding agricultural insurance requires a strong commitment from farmers, insurance companies, and local authorities.

Crucially, the initial guidance provided to farmers must be specific regarding policy terms, benefit payment amounts, and the damage verification process (including keeping production logs, invoices, and input material receipts). Most importantly, insurance benefits must be paid in a timely manner when damage occurs, ensuring farmers have the means to prepare for the next crop cycle.

Currently, the Agricultural Bank Insurance Joint Stock Corporation (ABIC) has implemented a rice damage insurance product. The insurance term is one year, covering all planting seasons within the year, from sowing to harvest. The sum insured is based on the average rice production cost. Benefit payments are calculated based on the actual area of rice completely lost at each stage of the rice plant’s growth and development.

Rice damage insurance covers four groups of risks: typhoons and tropical depressions; heavy rain, floods, and landslides; drought and saline intrusion; and hail, frost, earthquakes, and tsunamis. Notably, insurance benefits are verified and paid quickly without having to wait for the local government to officially declare a natural disaster.

A major underlying issue is that the infrastructure supporting agricultural insurance is either non-existent or very limited, particularly the lack of a shared agrarian insurance database. This includes historical data on production, risk levels at the commune and provincial levels, and weather index data. This deficiency ultimately prevents the establishment of trust between insurance companies and farmers.