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Agricultural insurance guarantees productivity

Released at: 20:00, 22/12/2017

Agricultural insurance guarantees productivity

Photo: Hai Van

"Agricultural Insurance: Identifying Challenges, Promoting Growth" forum on December 21 hears of benefits insurance provides to farmers and the economy.

by My Van

Vietnam is an agricultural country that not only meets the needs of its 95 million people but also exports to over 180 countries, with export value in 2016 of $32.14 billion and an estimated $36 billion this year, the “Agricultural Insurance: Identifying Challenges, Promoting Growth” forum organized by the Business Forum newspaper on December 21 heard. This is a remarkable achievement, reflecting the efforts of the entire agricultural sector and the Party and the State.

However, agriculture constantly faces major risks from natural disasters and epidemics. Moreover, Vietnam’s agriculture sector still features traditional agriculture and commodity agriculture, making it unable to promote its strengths.

The agricultural insurance sector has been operating soundly since 2011, with mechanisms and policies issued, but still bears many difficulties and limitations.

Therefore, in addition to policy efforts, the State, entrepreneurs, insurers, and farmers need to work together to make the agricultural industry become more and more productive and bring high value added.

Speaking at the opening of the forum, Mr. Hoang Quang Phong, Vice President of the Vietnam Chamber of Commerce and Industry (VCCI), said that agricultural insurance is a traditional insurance product among more than 500 current non-life products in the global insurance market, including more than 250 property insurance products, nearly 200 personal insurance products, and approximately 100 liability insurance products.

“Vietnam is an agricultural country, but annually, natural disasters and epidemics rob its GDP of an estimated 1.5 per cent,” he said. “Farmers need a guarantee for their labor and productivity, and agricultural insurance is the best hope.”

Although the government as well as the agricultural sector has a policy of inviting businesses to increase their investment, the proportion of investment in agriculture remains modest. One important reason is that investing in agriculture brings low profit but high risks.

According to figures provided by the Ministry of Agriculture and Rural Development, the number of enterprises investing in agricultural production accounts for less than 1 per cent of all enterprises in Vietnam and most are of small size. Enterprises with capital of less than VND5 billion ($220,068) account for 55 per cent of the total.

In addition, very few businesses invest professionally in agriculture. Most rely on the exploitation of natural resources such as land and water and have not paid sufficient attention to in-depth investment, the application of science and technology, or investments in modern equipment to increase production and export value. Meanwhile, links between enterprises and scientists and farmers in the production value chain have not been tight, leading to high costs, low competitiveness, and low efficiency.

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