Why are farmers reluctant to take out agricultural insurance?
Editor's note: Agriculture is a vulnerable industry, and especially in the face of natural risks, farmers always feel a strong sense of helplessness. In recent years, various places have adopted measures such as raising the level of meteorological forecasting and improving infrastructure conditions to strengthen farmers' ability to withstand natural risks, and have made up for farmers' post-disaster losses by strengthening the agricultural insurance system. But in many places, although preferences such as adding insurance varieties and increasing premium subsidies are offered, farmers' willingness to insure is still not high. What is restraining farmers' enthusiasm for taking out insurance? How should agriculture insurance, this "protective umbrella," be held more firmly? Please see our newspaper reporter's investigation.
As the saying goes, a storm may arise from a clear sky. On June 30, a sudden hail disaster struck the Daxing and Fangshan districts of Beijing, and nearly 240,000 mu of farmland and orchards were severely damaged. In the orchard of Lihua Village, Panggezhuang Town, Daxing District, the reporter saw fallen leaves and fallen fruit knocked down by hail everywhere, and many of the fruits still hanging on the branches also bore marks of being battered.
More than ten minutes destroyed a farmer's hope for a whole year
"The biggest hailstones were as big as walnuts, and it hailed for more than ten minutes. More than 80 percent of the pears were damaged." Speaking of the hail that suddenly arrived at 5 a.m., Guo Shubing, a fruit farmer in Lihua Village, still felt extremely distressed. "Of more than 20 mu of pear trees, not much is left hanging on the trees. The loss must be around 80,000 yuan. There is no hope this year!"
Lihua Village is located on the east bank of the Yongding River in the southwestern suburbs of Beijing. The pear trees in the village are the largest area of old trees in the entire North China region. Almost every household has fruit trees, with more than 30 varieties including Jingbai pear, "Jinbahuang", and Guang pear. In a normal year, one mu can sell for around 4,000 yuan.
Hail has been encountered in previous years too, but one as severe as this year's had not been seen for many years. What saddened the fruit farmers even more was that this hail disaster not only caused a total loss this year, but because the hail knocked down many branches and leaves, it will prevent flower buds from forming properly next year, greatly affecting next year's harvest. Moreover, if later management is improper, production may not be able to recover within 4 to 5 years.
After the hail disaster occurred, Li Songtao, a senior engineer in the Industry Development Division of the Beijing Municipal Bureau of Landscape and Greening, rushed to the disaster area to guide the affected fruit farmers in taking post-disaster remedial measures. "Clean up the fallen fruit as soon as possible to prevent the breeding of bacteria; then spray the fruit trees with insect-prevention liquid and give them nutrient injections so that the trees' vigor can recover as soon as possible." He advised the farmers.
Li Haiyan, also from the same village, was likewise choked with tears. Compared with Guo Shubing's family, her family's losses were even greater. Not only were 15 mu of pear trees affected, but 3 mu of watermelons were also completely split open by the hail. At current market prices, one mu of watermelons can sell for more than 10,000 yuan. Added to the loss of the pear trees, this year's income will be reduced by at least 120,000 yuan. "Last year I had just bought a house for my son and a car for my daughter, and I had originally thought there would be a good harvest this year. I never expected that a hail disaster would wipe everything out." Li Haiyan, who had been full of confidence, can now only sigh.
The reporter learned from the Beijing Municipal Rural Affairs Committee that this hail disaster mainly occurred in Daxing and Fangshan, affecting 17 townships and 231,200 mu of farmland, greenhouses, and fruit trees, with economic losses of 443 million yuan.
The only thing Guo Shubing hopes for now is to receive the insurance company's loss assessment result as soon as possible, so as to reduce some of the losses from this hail disaster.
The compensation amount differs greatly from farmers' expectations
In the face of frequent natural disasters, improving disaster prevention and mitigation capacity is particularly important. In fact, after the "7·21" catastrophic rainstorm disaster in 2012, Beijing attached great importance to agricultural disaster prevention and mitigation, continuously strengthened capacity building, and strived to reduce the impact of natural disasters such as drought and flooding, achieving remarkable results. However, for natural disasters such as tornadoes and hail, which occur in small areas but are enormously destructive, under current technical conditions, accurate forecasting is still difficult. Once a disaster occurs, the importance of agricultural insurance for post-disaster production recovery becomes prominent.
Although they suffered the same natural disaster, not every affected farmer could obtain insurance protection and compensation like Guo Shubing. According to statistics from the Fangshan District Bureau of Landscape and Greening, the forestry industry in the whole district suffered nearly 39,000 mu of affected area in this hail disaster, of which only 37 percent had purchased insurance. Viewed citywide, apart from major varieties such as breeding pigs and hogs in the livestock industry, the underwriting scale of most other insurance types did not exceed half.
The reporter learned that in order to enable agricultural insurance to protect farmers' interests, the Beijing municipal government has continuously increased policy support. For example, on premiums, the municipal finance department bears 50 percent, the district-level finance department subsidizes another 10 percent to 40 percent, and individual farmers need to bear as little as 10 percent.
Taking Daxing as an example, farmers growing watermelons only need to bear a premium of 18 yuan per mu, and once affected they can receive up to 1,000 yuan in compensation; for pears, paying 32 yuan per mu can yield up to 2,000 yuan in compensation. According to estimates, overall, farmers can obtain 102 yuan of risk protection by paying 1 yuan. In terms of varieties, Beijing currently has 33 agricultural insurance varieties in total, leading the country. At the same time, judging from the insured amounts of major insurance types nationwide, Beijing's standards also far exceed those of other regions.
With such preferential policies, why is farmers' willingness to participate in insurance still not strong? Gao Zhenzong, a fruit farmer in Baicaowa Village, Doudian Town, Fangshan District, explained that because of its geographical location, the climate here has always been relatively stable. The last time hail this large fell had to be traced back to 1975. So for so many years, he had always trusted to luck. However, this hail disaster also awakened his risk awareness, and in the future he will actively insure to reduce economic losses caused by disasters.
In addition to wishful thinking, more farmers are unwilling to participate in insurance because they feel the compensation amount simply cannot make up for their losses. "They only count fallen fruit. Even if it is smashed and only half the fruit remains, if it has not fallen to the ground, they will not compensate." Guo Shubing said, "In fact, the pears that were battered cannot be sold at all, and they only calculate according to the price of ordinary pears, but the price of white pears is much higher than that of ordinary pears." Guo Shubing calculated that in a normal year one mu can sell for about 4,000 yuan, while the insurance company can compensate at most 2,000 yuan, so the actual compensation is less than half of the loss. Even more obvious is watermelon: one mu can only be compensated at most 1,000 yuan, while according to current market prices, the income from one mu of watermelon should be more than 10,000 yuan, so the compensation can only make up 10 percent of the loss.
Because Beijing is seriously short of water resources and land resources, and labor costs remain high, in recent years farmers have focused on developing high-end green and organic agriculture. In terms of fruit, they mainly develop famous and superior varieties. The market prices of these agricultural products are far higher than those of ordinary varieties. Once a disaster occurs, the compensation amount from insurance companies is indeed difficult to make up for farmers' losses.
Promote the transformation of agricultural insurance from a cost-protection model to an income-protection model
After the "6·30" hail disaster, Daxing and Fangshan actively took measures to carry out post-disaster self-rescue and reduce farmers' losses. Lin Keqing, vice mayor of Beijing, pointed out during an investigation in the disaster area that the next step should focus on agricultural insurance work and actively carry out various post-disaster handling tasks. Insurance companies should complete compensation work as soon as possible, ensuring that compensation is paid wherever it is due, that compensation is given at the higher end, and that farming seasons are not missed.
In response to farmers' doubts that compensation is too little, the reporter interviewed insurance companies. An industry insider told the reporter that agricultural insurance is the type of insurance with the highest payout ratio. Today's agricultural insurance is all policy-based insurance. Only with government subsidies will insurance companies reluctantly do it. "The payout ratio is high, and the labor cost is also the highest. Once a claim occurs, personnel must rush to every plot of land as soon as possible. Calculated this way, agricultural insurance is almost unprofitable." the industry insider said.
Data show that last year Beijing's agricultural insurance premium income totaled 512 million yuan, with claims paid reaching 425 million yuan, a payout ratio of 83 percent, down 21 percentage points from 104 percent in 2014, but the combined ratio of the 5 insurance companies still exceeded 100 percent. The simple payout ratio of 10 insurance types including wheat exceeded 100 percent, and the payout ratio for pears reached 205 percent.
With such a high payout ratio, why do farmers not feel it? "This is because everyone has a biased understanding of agricultural insurance." Explained Zhang Qiao, director of the Agricultural Risk Management Research Center of the Chinese Academy of Agricultural Sciences. "At present, China's agricultural insurance is still in its initial stage. What it protects is still the basic cost input of crops, not the income from agricultural products. Compensation payments can help farmers restore reproduction, but they are not enough to make up for harvest losses."
"When there is no disaster, the money is paid in vain; when there is a disaster, the compensation is small." Many farmers said during interviews that paying little is certainly a good thing, but the problem is that once a disaster occurs, farmers' "sense of gain" from this policy is also not strong. "At present, agricultural insurance mainly protects costs, and this model constrains the increase in farmers' willingness to insure under policy-based agricultural insurance." said Cui Hongzhi, a researcher at the Rural Development Institute of the Chinese Academy of Social Sciences.
This year's Central Document No. 1 proposed making agricultural insurance an important means of supporting agriculture, expanding the coverage of agricultural insurance, increasing insurance varieties, and raising the level of risk protection. Zhang Qiao introduced that in addition to the currently implemented "low protection, broad coverage" "cost protection" model, there is also an "income protection" model with the policy goal of safeguarding farmers' welfare, but this model places higher demands on the government's financial capacity for subsidies and farmers' own ability to pay, and requires finding a balance between a relatively high compensation level and relatively reasonable premium input.
Li Haiping, deputy director and spokesperson of the Beijing Municipal Rural Affairs Committee, said that during the "13th Five-Year Plan" period, Beijing will gradually raise the insured amounts of relevant insurance types according to the actual situation of agricultural production and promote tiered insurance. At the same time, it will further study the transformation of agricultural insurance from cost protection to income protection, so that agriculture insurance, this "protective umbrella," can be held more firmly.