134 Million Mu of Greenhouse Vegetables Affected in Hebei: Why Are 90% of Vegetable Farmers Unfazed?
[Introduction·China Vegetable Network]Since November 2015, continuous smog plus wind and snow weather has affected 1.34 million mu of greenhouse vegetables in our province, with 830,000 mu damaged and 73,000 mu completely lost, yet very few vegetable farmers have insurance, less than 10%. In 2008, the "Hebei Province Planting Industry Insurance Premium Fiscal Subsidy Management Measures" was issued, and a pilot program for fiscal subsidies on agricultural insurance premiums was carried out across the province.
Since November 2015, continuous smog plus wind and snow weather has affected 1.34 million mu of greenhouse vegetables in our province, with 830,000 mu damaged and 73,000 mu completely lost, yet very few vegetable farmers have insurance, less than 10%.
In 2008, the "Hebei Province Planting Industry Insurance Premium Fiscal Subsidy Management Measures" was issued, and a pilot program for fiscal subsidies on agricultural insurance premiums was carried out across the province. Since 2012, our province has successively included 28 vegetable demonstration counties in the pilot counties for fiscal subsidies on agricultural insurance premiums. In these pilot counties, a spring-autumn arched shed with a premium of 250 yuan can enjoy 5,000 yuan of risk protection, and a general greenhouse with a premium of 500 yuan can enjoy 10,000 yuan of risk protection. Half of the premium is paid by fiscal authorities at all levels. Even so, the farmer insurance participation rate remains very low. Why is this?
Weak insurance awareness, low payouts, troublesome procedures: farmers treat agricultural insurance as a “chicken rib”
“We don't get much extreme rain and snow weather here. If there's no disaster, taking out insurance is just paying money for nothing.” This is the sentence heard most often in vegetable-producing areas.
The reporter learned that in planting and breeding areas where disasters occur less often, farming households are unwilling to take out insurance, while in areas where disasters occur relatively more often, farming households are somewhat more willing to take out insurance. The overall situation is that most farmers in our province currently do not have strong insurance awareness, hold onto a gambler's hope, and are unwilling to take out insurance.
Low payouts and troublesome claims procedures are also reasons many farmers are unwilling to continue taking out insurance.
“I took out insurance in 2014. After suffering a snow disaster, the insurance company verified losses of more than 170,000 yuan, but so far only just over 50,000 has been paid, with 120,000 still owed.” Wu Zaiqiu, a large vegetable-growing household in Chicheng County, said, “When they want the premium, they come to your door to collect it. But when it's time to pay out, the procedures are so troublesome. Going back and forth several times and waiting nearly three months, each shed only got a few hundred yuan. Up to now a whole year has passed, and the money that should have been paid still has not been delivered.”
“I can't afford to waste the time. Rather than listen to the insurance company's explanations, I'd be better off going out to work.” A vegetable farmer who was unwilling to give his name told the reporter.
A staff member of the Gu'an County Vegetable Bureau introduced that the current agricultural insurance policy only covers above-ground materialized costs, does not include labor costs, and still less covers the seasonal yield. Policy-based insurance only covers facilities and does not cover vegetable output, so at most several thousand yuan can be paid per mu. If the depreciation rate is included, the payout is even less. Ordinary farming households have limited planting area, and their returns are not high to begin with, so most are unwilling to bear the insurance cost.
Thin profits, tiring verification: insurance companies keep their distance
Not long ago, when the reporter contacted the head of the branch set up in Chicheng County by China United Property Insurance Company Limited for an interview, he was in the fields verifying the disaster situation of the vegetables.
After receiving news in mid-November 2015 that more than 600 vegetable greenhouses in Chicheng County had been affected, the company mobilized all its staff and went to the affected plots every day to verify the disaster situation. It took more than a month to finish the verification.
“Dealing with farmers one household at a time is troublesome. Verifying the damaged area, the degree of disaster, and so on involves a considerable workload.” This is almost the consensus among insurance companies.
Agricultural insurance yields meager profits. The payout ratio of agricultural insurance in our country is around 90%, far higher than the 70% threshold generally recognized in the insurance industry. A business staff member in the agricultural insurance department of the Provincial People's Insurance Company introduced that agricultural insurance has high risk, a high payout ratio, and low rates, and is a non-profit-oriented type of insurance. Major disasters such as floods, droughts, strong winds, and rain and snow often affect a relatively large area and involve very complex targets. If full compensation were paid according to the policy, insurance companies would find it hard to pay. When economic benefits collide with social benefits, enterprises often choose to keep their distance.
Insufficient grassroots strength of insurance companies is also a major factor restricting the development of agricultural insurance. Grassroots staff of China United Property Insurance Company Limited introduced that commercial insurance companies have limited formally employed personnel, and much of the work, such as filling out lists and verifying the affected area, location, and degree of damage, involves a relatively large business volume, making it difficult to meet the needs of large-scale underwriting of crop insurance.
There are risks and also potential: substantial development still requires joint efforts from multiple parties
Although farmers' overall insurance awareness is not strong, the growth potential of agricultural insurance should not be underestimated. Wang Zhixuan, director of the Gu'an County Vegetable Bureau, introduced that in recent years, through land transfer, many large growing households have appeared. These large households make large production investments and face high risks, and their insurance awareness and enthusiasm for participating in insurance are relatively high. Insurance companies can target these large growing households, carry out targeted publicity, and customize insurance contracts individually.
Wang Zhixuan introduced that two years ago, insured large vegetable-growing households in their county suffered a disaster, and the insurance company promptly verified and compensated them. The county seized the opportunity, printed and distributed publicity materials, and explained the benefits of insurance to farmers, and farmers' enthusiasm for taking out insurance generally increased.
Industry insiders pointed out that governments at all levels and relevant departments should actively participate in crop insurance work and increase targeted publicity, including insurance scope, claims standards, damage assessment and determination methods, determination institutions, and claims procedures, so that farming households can correctly understand agricultural insurance.
At the same time, insurance companies' loss determination standards must be scientific, reasonable, standardized, transparent, and fair. It is suggested to integrate the technical forces of departments such as insurance, finance, agriculture, meteorology, water conservancy, and statistics, and establish a risk disaster assessment group for vegetables and other crops and a rapid assessment and claims response mechanism. After a disaster occurs, it should be possible to promptly, scientifically, and efficiently survey and determine the cause of damage, the source of risk, and the degree of loss, make the claims procedures public, and improve the credibility of claims results and farmers' satisfaction.
“Turning the potential growth points of insurance into reality still requires joint efforts from multiple parties.” Duan Lingling, deputy director of the Provincial Department of Agriculture, believes that judging from the pilot situation in our province at the current stage, policy-based agricultural insurance has already shown a glimmer of dawn, but if agricultural insurance is to truly escort agricultural production, the government must further introduce corresponding policy measures.
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Policy-based agricultural insurance
Policy-based agricultural insurance refers to a type of agricultural insurance in which the state, in order to protect and develop agriculture, implements certain policies and funding support for it. Relying on the market-oriented operation of insurance companies, and with government support through policies such as premium subsidies, it provides direct materialized-cost insurance for economic losses caused to planting and breeding industries by natural disasters and accidents.
Policy-based agricultural insurance is a “green box policy” allowed by the WTO for supporting agricultural development. It is essentially different from commercial insurance. From the perspective of insurance purpose, policy-based agricultural insurance takes the implementation of government policy as its primary goal and has a clear public interest orientation, while commercial insurance aims at profit and belongs to the individual behavior of insurance companies. From the perspective of insurance form, policy-based agricultural insurance can adopt either a compulsory form or a voluntary participation method, while commercial insurance is characterized by voluntariness and non-compulsion. From the perspective of premium compensation design, policy-based agricultural insurance usually has the characteristic of a relatively fixed amount, while the premium design of commercial insurance has symmetric, non-fixed-amount characteristics.
At present, policy-based agricultural insurance supported by the central government basically covers all fields of both planting and breeding industries. In terms of planting, the main crops covered involve 7 varieties: corn, rice, wheat, cotton, soybean, peanut, and rapeseed. In terms of breeding, on the basis of consolidating and developing insurance for breeding sows, dairy cows, and other livestock, insurance services in fields such as poultry, freshwater aquaculture, and local specialty agriculture are actively carried out. In addition, our province, in light of the actual situation of being a major vegetable province, has also carried out policy-based vegetable insurance, further broadening the service fields of agricultural insurance.