Valdes private sectorinitiatives

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Valdes private sectorinitiatives

  1. 1. Agriculture Insurance in the Philippines Today’s Dilemmas
  2. 2. <ul><li>In practice, agricultural or crop insurance is really an adjunct to a whole set of risk management measures of which adequate farm management practices constitute the most important. Insurance by itself is no substitute for good production practice. The test of a good insurance programme is the cost versus the expected benefits and the sustainability thereof. </li></ul><ul><li>Diverse Objectives for Value Chain Analysis </li></ul><ul><ul><li>Identify existing gaps and inefficiencies by analyzing cost structure of the system and seek ways to reduce these costs and increase productivity </li></ul></ul><ul><ul><li>To understand and improve the positions of certain stakeholders </li></ul></ul><ul><ul><li>Unlocking additional value in the supply chain </li></ul></ul>
  3. 3. AGRICULTURE Ex. RICE – PLANTING SEASON Seedings Planting Nurturing or Growing Harvesting Pests Excessive Pesticide Fire Irrigation | | CAT Perils (EQ, TYPHOON, FLOOD) Optional: Landslide on hillside plots Volcanic Eruption Near active volcanoes (to include volcanic ash damage, lahar, etc.. | | | | | | | | | | | | | |
  4. 4. TRANSPORT & WAREHOUSING RISKS Storage Loading Transit Storage Unloading Pests Fire CAT Perils (EQ, TYPHOON, FLOOD) Pilferage Hijacking Collapse of Bridge Overturning of vehicle Collision/Accident | | | | | | | | | | | | | | | |
  5. 5. MARKET RISKS Storage Risks Display Risks Loss of Value Pests | | Fire CAT Perils (spillage/robbery) (wetting/heat) | | | |
  6. 6. <ul><li>Single Peril Insurance… Yes </li></ul><ul><li>Multiple Peril… No </li></ul><ul><li>Private sector can deliver sustainable and actuarially fair </li></ul><ul><li>single peril insurance products but not multiple peril </li></ul><ul><li>products. </li></ul><ul><li>Examples: hail, rain, fire, wind </li></ul><ul><li>But single peril is not interesting to most resource limited </li></ul><ul><li>farmers. Poor farmers want yield and/or revenue </li></ul><ul><li>protection at an affordable price. </li></ul>
  7. 7. <ul><li>Traditional Multiple Peril Insurance </li></ul><ul><li>Programs Unsustainable </li></ul><ul><li>• Moral Hazard </li></ul><ul><li>• Adverse Selection </li></ul><ul><li>• High Administration Costs </li></ul><ul><li>• Pricing Dilemma: Sound pricing would make it unaffordable. Subsidized pricing represents fiscal cost that worsens as national income levels fall and size of farm population rises. </li></ul>

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