Farmer’s knowledge of crop insurance key for development

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Crop insurance can play an essential role in the agriculture sector because erratic weather on account of climate change is a big challenge for local and foreign investors.
Currently, a weather index-based crop insurance system is on a trial run in Myanmar to help farmers tackle problems when crops are damaged by erratic weather conditions. Lack of crop insurance has been landing farmers in a debt trap as it is hard for them to pay off loans to the government when their crops get damaged.
It was heartening to see recently that Myanmar Insurance paid 30 per cent of the premium to farmers in Shwebo, Sagaing Region, who had bought insurance, after the amount of rainfall did not reach the set 114 mm level during the September-October period.
The weather index-based period is set from July to October. If the amount of rainfall does not reach the agreed upon level in the first two months, farmers get about 20 per cent of the premium. If it fails again in the last two months, about 30 per cent of the premium is paid.
Farmers are keen to avail crop insurance as it can cover possible losses. The premium rating will depend on the data procured after the joint survey. The liability rate may vary depending on the climatic conditions in each region as the weather index differs in each place.
Myanmar is listed among countries which are adversely affected by erratic weather. This is the reason why crop insurance is important for our farmers.
We believe that insurance protects farmers’ livelihoods in times of crop failure. But, we need to ensure that the insurance does not change farmers’ incentives, which in turn might change their behavior.
When farmers know they will receive an insurance payout if their crop fails, they may take fewer steps to mitigate that risk, or choose to grow riskier crops. We must prevent this by inculcating awareness.
Still another concern is that farmers with crop insurance might not take enough precautions against extreme weather, since crop losses will be covered. Without insurance, farmers who find that they are no longer able to raise a particular crop at their location might grow something else or move production elsewhere.
It is the responsibility of the authorities concerned to educate the farmers that those whose premiums rise after they experience large losses due to extreme weather should take steps such as switching to more resilient crops.

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