FPO pushes wider crop insurance cover

FPO pushes wider crop insurance cover

The Fiscal Policy Office (FPO) has floated the idea of cutting the government's compensation paid for crops damaged by natural disasters but urged a rise in compensation paid by crop insurance in order to encourage more farmers to buy policies.

Crop insurance must be increased while government compensation is decreased to expand insurance coverage areas, said FPO financial policy adviser Lavaron Sangsnit. For instance, crop insurance compensation can be raised to 1,500 baht a rai if government compensation for crops damaged by natural disasters is trimmed to 800 baht per rai from 1,113 baht at present.

The government pays 1,113 baht a rai for up to 30 rai for farmers whose crops are affected by natural disasters. Those who take out crop insurance policies get an additional 1,111 baht a rai.

A study found crop insurance premiums will be lowered significantly if coverage areas reach 10 million rai, he said. Farmers who grow rice in the riskiest areas will see crop insurance premiums decline to below 300 baht a rai from 450 baht, while premiums will fall to 200 baht a rai if crop insurance areas reach 20 million rai.

Around 1.5 million of the 63 million rai of rice fields in Thailand are covered by crop insurance.

The insurance scheme divides farmland into five areas depending on risk exposure. Farmers are required to pay 60-100 baht a rai while the government contributes the rest. The Bank for Agriculture and Agricultural Cooperatives subsidises 10 baht per rai for crop insurance for its customers.

The premiums have been set at 124-484 baht a rai according to risk.

Luck Wajananawat, president of the state-backed farm bank, said the insurance scheme was a pilot project and could be extended to the second rice crop and other farm products from the main rice crop.

Anon Vangvasu, president of the Thai General Insurance Association, said seven insurance firms in the scheme had lost 2 billion baht in the past two years because the coverage areas were too small.

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