Crop insurance helps Indonesian farmers recover after natural disasters

Written by Metta Kongphan-apirak, Project Coordinator of Remote Sensing-based Information and Insurance for Crops in Emerging Economies (RIICE) Project

The Indonesian government is stepping up their efforts to make more rice farmers understand the benefits of the rice insurance scheme.

The exchange visit of the Indonesian officials who are in charge of crop insurance to Bangkok was organized between April 29 and May 1, 2019 by the Remote sensing-based Information and Insurance for Crops in Emerging economies (RIICE) project with the supports from Germany’s international cooperation for sustainable development, GIZ based in Indonesia and Jasindo, an Indonesia-based general insurance company.

Currently, the insurance scheme allows farmers to insure crop against losses incurred by natural disasters including floods and drought. The insurance also covers harvest failure due to disaster-related damage.

However, the outreach of paddy crop insurance is still far from the target coverage of 1 million hectares per year.

With the payout, farmers will be able to buy farm inputs and seeds to re-grow their crops. Moreover, farmers can repay their loans even during the time of crop failure with the support of the insurance.

Nevertheless, farmers receive little information about the crop insurance and its benefits to their livelihoods and their farms. They thought the money should go for farm inputs, which ensure relatively tangible yields instead.

The farmers do not understand the registration and claim procedure, worrying if there is crop failure, the compensation will be very difficult to claim.

“Agriculture insurance has very special characteristics and multiple parties working together on data and technology in the insurance value chain is crucial. We need to expediate these processes and make them easy for farmers to deal with insurance,” said Ika Dwinita Sofa, Group Head of Agriculture, Micro Insurance and Government Program at PT Asuransi Jasa Indonesia, the second largest general insurance company in Indonesia.

She pointed out that there should be an evaluation on the current scheme of crop insurance in Indonesia. An adoption and modification in terms of claim process based on an area approach with the use of remote sensing technology should also be taken into account.

While Noor Avianto, Head of Farming Sub-director at the National Development Planning Agency or Badan Perencanaan Pembangunan Nasional (BAPPENAS) put more emphasis on cooperation on information exchange and sharing of experience on crop insurance.

“Knowledge sharing has been of great importance within our cooperation to implement an agricultural insurance scheme in Indonesia. With our pilot coming to an end soon, it is time for the Indonesian government to come up with a medium-term plan and vision for crop insurance.”

The exchange visit aims to provide an opportunity for the involved officers at both policy and operational levels to share knowledge and experiences to improve the crop insurance programme and drive it forward in the Indonesian context.

About 10 representatives from Indonesia’s Ministry of Agriculture, the BAPPENAS, PT Asuransi Jasa Indonesia and GIZ Indonesia took part in the trip.

The delegates from Indonesia visit Bank for Agriculture and Agricultural Cooperatives (BAAC)’s exhibition in Bangkok during their exchang visit between May 29 – April 1, 2019 to learn about history and development of Thailand’s state-owned bank as well as roles of financial institution in crop insurance. (Photo credit: Bank for Agriculture and Agricultural Cooperatives)
The delegates from Indonesia visit Bank for Agriculture and Agricultural Cooperatives (BAAC)’s exhibition in Bangkok during their exchang visit between May 29 – April 1, 2019 to learn about history and development of Thailand’s state-owned bank as well as roles of financial institution in crop insurance. (Photo credit: Bank for Agriculture and Agricultural Cooperatives)
The delegates visit the office of Aon Re (Thailand) Ltd. in Bangkok to learn and exchange information about insurance service in Thailand. (Photo credit: GIZ Indonesia)
Delegates pose for a group photo at Bank for Agriculture and Agricultural Cooperatives (BAAC), Bangkok (Photo credit: GIZ Indonesia)
The delegates visited Aon Re (Thailand) Ltd. office to learn and exchange about the Crop Insurance in Thailand – Insights provided by the private sector
The delegates visit Aon Re (Thailand) Ltd. office in Bangkok to exchange their experience in crop insurance with the private sector.
(Photo credit: GIZ Thailand)