Taiwan, China introduces its first-ever banana revenue insurance, protecting income against both natural disasters and price crashes

The first-ever crop "revenue insurance" in Taiwan, China: whether the market crashes or a natural disaster reduces total revenue, farmers who enroll in the insurance are guaranteed a certain income! The Council of Agriculture today announced the launch of the "Banana Revenue Insurance Pilot Program." This insurance breaks with previous crop insurance, which only covered "disaster losses" - revenue insurance also covers losses when crop prices crash.

The first wave targets the fruit with the largest planted area in Taiwan, China - bananas (betel nut is not within the Council of Agriculture's recognized fruit categories). The designated pilot areas are the major banana-producing regions of Kaohsiung and Pingtung, including Qishan District, Meinong District and Daliao District in Kaohsiung, and Gaoshu Township and Ligang Township in Pingtung. After a one-year pilot, it will be expanded to other areas depending on results. Enrollment is open from October this year (year 108 of the Republic of China calendar) to March next year (year 109 of the Republic of China calendar); the insurance period covers January to December of year 109, and settlement and claims payment will take place in February of year 110.

Whether the market fluctuates or the weather changes, farm households are ensured a reasonable income

Chou Miao-fang, deputy director of the Council of Agriculture's Planning Department, said that in response to agricultural operating risks such as climate change, trade liberalization and market price fluctuations, the banana revenue insurance is being piloted. In recent years extreme weather has had a major impact on crops and can easily lead to poor harvests - for example, this February's drought affected onion growth, and last year's warm winter prevented lychees from flowering. Besides harvests being affected, market price fluctuations also affect farmers' incomes.

Japan and South Korea, which have climates similar to Taiwan, China, have also often offered disaster-type insurance in the past, and in recent years have begun promoting agricultural revenue insurance one after another, mainly to protect farmers' incomes through insurance. For this reason, bananas - the fruit with the largest planted area - were chosen as the first item to promote.

First pilot in the Kaohsiung-Pingtung area; enrollment qualifications are as follows

This policy selects Kaohsiung and Pingtung as the pilot areas. These two counties and cities are the main banana-producing regions, accounting for 40% of the nation's banana output, especially Qishan District, Meinong District and Daliao District in Kaohsiung, and Gaoshu Township and Ligang Township in Pingtung. In total, 3,170 farm households and 2,258 hectares are covered in this pilot.

Enrollment qualifications are as follows:

(1) Farmers in the pilot areas who actually grow bananas on an area of 0.1 hectares or more and who lawfully use agricultural land; supporting documents are required when applying.
(2) The planted area must be mainly for large-scale banana production, with a density consistent with local customary cultivation, and must not be intercropped or mixed with other crops.
(3) The insured bananas must be harvested during the insurance period, because bananas take one year to grow; bananas not harvested within the insurance period are not eligible for compensation.
(4) At the time of enrollment, the plants must be over 100 cm tall and must not yet have emerged heads; the calculation ratio of plants per hectare will be reviewed by the farmers' association in the field, and it is not limited to healthy seedlings.

Revenue protection has four tiers; the government subsidizes half the premium per hectare

There are four tiers of revenue protection, set at 550,000, 600,000, 650,000 and 700,000 per hectare for farmers to choose from. The coverage amount is calculated based on the Agriculture and Food Agency's benchmark price for each production area over the past 5 years, the regional benchmark yield for each area, and the level of protection. Because yields and prices over the past fifteen years have differed, premiums will vary by region. The Council of Agriculture provides a subsidy for half the premium amount; the higher the coverage level, the higher the premium subsidy, but considering the government's financial situation, the maximum subsidy is capped at 30,000 per hectare. Farmers can choose their coverage through their policy option. There is no upper limit on insured area; it all depends on each farmer's cultivation situation.

For example, if a Qishan banana farmer chooses coverage of 700,000 per hectare, the government pays half the premium and the out-of-pocket amount is 20,307 yuan. At harvest, suppose Qishan has a bumper crop, with an average yield of 25,740 kg per hectare and a farm-gate price of 22.3 yuan per kg; the multiplied revenue is 574,002 yuan. For the shortfall below 700,000 yuan, the farmer can apply for a claim, meaning 125,998 yuan can be paid per hectare. (700,000 yuan - 574,002 yuan = 125,998 yuan)

This insurance is a policy-based insurance, piloted by local farmers' associations, with voluntary enrollment by farmers. To enroll, farmers must register the variety grown, the time, the number of plants, the area and the production method (conventional, friendly, organic). Promotion begins in August; the application and enrollment period runs from October this year to March of year 109; the insurance period covers January to December of year 109; settlement and claims payment will take place in February of year 110; the claim amount is the revenue protection level minus the regional revenue for that year, with a maximum amount of 400,000; and production area is measured in hectares.

Organic farmer: The insurance is well-intentioned, but organic farmers may find it hard to apply

An organic banana farmer in Ligang, Pingtung, said he believes the government's intention in offering banana revenue insurance is good, and if the farmers' association comes to invite him, he would have a chance to apply and enroll. However, the probability of not meeting the application qualifications is very high, because the current conditions sound geared toward conventional farming, while organic and friendly farmers use different cultivation methods and densities, so just getting past the first application qualification threshold may be difficult. In addition, his own farm supplies bananas year-round, unlike the common harvest period concentrated in a specific two or three months each year. Sometimes after harvesting this month, he replants immediately the next month, so the plant assessment standards may not necessarily fit.

Junteng Farm in Zhongliao Township, Nantou County, believes the government's willingness to show goodwill toward bananas is good, and only by being willing to try can progress be made, but the current conditions aimed at the major Kaohsiung-Pingtung production areas should be revised further if they are to apply nationwide, because conditions differ from place to place. In Nantou, flat land is scarce and bananas are almost all grown on hillside land; harvesting is more labor-intensive than on flat land, with a labor harvesting cost of 1,500 yuan per 100 kg, whereas in the Kaohsiung-Pingtung area the harvesting cost is about 1,200 yuan or less per 100 kg, while Nantou's banana output is about 30% lower than that of the Kaohsiung-Pingtung area. The same enrollment conditions need to be adjusted to local circumstances.