Better access to technical support, agribusiness awareness, and financial initiatives including insurance options are key to the creation of an ecosystem that will help support and enable smallholder farmers in the Philippines, according to Pioneer Inc. President & CEO Lorenzo Chan Jr.
Attended by over 130 global stakeholders on scaling agri-insurance for the smallholder farmers,
Chan shared his recommendations during The State of the Sector Update commissioned by the Bill & Melinda Gates Foundation, with the support of FSD Africa, the Swiss Re Foundation, and the Syngenta Foundation for Sustainable Agriculture, as well as implemented by ISF Advisors and the Microinsurance Network (MIN).
“Almost 24% or roughly over 25 million of the Philippine population are engaged in agriculture. But only about two million farmers have some kind of insurance. The lack of awareness about agribusiness and how it works remains a reason for low insurance penetration,” Chan said, who also serves as the chairman of the MIN, an international multi-stakeholder platform for inclusive insurance.
He said farming in the country becomes ever more challenging with climate change causing more unpredictability and accentuating an existing problem affecting low-income populations disproportionately harder than the rest. “Smallholder farmers are exposed to the financial risks of supplying food on tables across the country,” Chan added.
From 2010 to 2019, agricultural damage amounted to P290 billion. Typhoons in 2020 alone have wiped out P14.25 billion worth of agricultural goods. The recent typhoon Odette in 2021, meanwhile, destroyed P13.3 billion in agricultural damage alone. The country is exposed to an average of 20 typhoons or cyclones a year.
With this alarming condition, Chan raised his concerns on the global stage, pushing for the creation of an ecosystem for agribusiness by filling in the gaps as well as tackling incentives and drivers of change, such as awareness building and better insurance options for smallholder farmers. These solutions, according to Chan, would help smallholder farmers manage risks they face regularly.
“Almost 24% or roughly over 25 million of the Philippine population are engaged in agriculture. But only about two million farmers have some kind of insurance. The lack of awareness about agribusiness and how it works remains a reason for low insurance penetration,” he said.
Filling in the loopholes
Chan said that education, access to affordable finance, and financial initiatives are also key concerns that need to be addressed. “Due to limited access to credit, farmers are forced to sell their marketable surplus during harvest months when prices are low,” he explained. “ Another gap that needs to be filled, is the level of technology and technical support available to smallholder farmers,” he added.
“Take the issue of declining soil fertility. The lack of technical know-how has contributed to the use of wrong fertilizers. A number of them still use chemicals instead of organic, which damages the land over time. Still, others overuse pesticides continuously without giving the soil a break since many farmers are pressured to keep producing to pay off their loans. These issues contribute to inefficiency and low yield hence, low profit.
Apart from biological, climate, technical, and financial challenges, Mr. Chan pointed out smallholder farmers face another issue with the entry of cheap rice imports. Millions of farmers, millers, and other market players continue to pay the price for trade liberalization.
To date, there are only two insurance providers for smallholder farmers in the Philippines: state-run Philippine Crop Insurance Corp. (PCIC) and CARD Pioneer Microinsurance Inc. (CPMI). Early this year, PCIC and CPMI entered a risk-sharing program that would benefit the agriculture sector by insulating them from risks such as flood, typhoon, drought, plant diseases, pest infestation, among others. This public and private partnership in agri insurance is the first in the market.
“Stronger public and private collaboration towards a more comprehensive and cohesive approach to end the status quo is needed now more than ever,” Chan said. “Let us remember that no one should be left behind. Least of all, those people who provide food for our table and sustenance for our bodies.”