Farmers Reject Claims for Government Crop Insurance Subsidies – Manila Bulletin


The Federation of Free Farmers (FFF) said the money that goes to the Philippine Crop Insurance Corporation (PCIC) is a government contribution to premiums for crop insurance policies issued to farmers, not subsidies.


The FFF released this clarification on efforts to debunk claims that the government heavily subsidized the PCIC, following a statement by the Ministry of Finance that the government had given 23.3 billion pesos in grants to agency over the past 20 years.

The DOF further stated that “this trend is not sustainable” and cited the need to stem the “financial drain” of the company.

“PCIC charges a premium to cover expected claims from farmers resulting from crop losses. This premium is divided between the parties who have an insurable interest or stake in the insurance policy – the farmer who is at risk of losing his crop, the lending bank who may not be able to collect the farmer, and the government. who is obligated to help farmers recover in order to maintain the country’s food supply, ”said Raul Montemayor, national director of the FFF.

“The alleged government subsidies are in fact payments for its share of the total premium,” he added.

Montemayor said that remittances to PCIC have increased in recent years due to the government’s decision to fully cover premiums for marginal and non-borrowing farmers and to expand program coverage to other sectors such as livestock. , who have been affected by African swine fever (ASF) disease.

The additional funding came from mandatory allocations under specific laws, such as the Agri-Agra Act, and budget allocations from Congress.

On September 14, on the recommendation of the DOF, President Rodrigo Duterte issued Executive Decree (EO) 148, transferring the PCIC from the Department of Agriculture (DA) to the DOF to ensure that “government assets and resources are used effectively ”.

The FFF warned that removing government premium shares, as proposed by the DOF, would result in higher premiums for farmers and discourage them from purchasing crop insurance. Banks in turn will find it too risky to lend to uninsured farmers.

“Under these conditions, private companies are unlikely to enter the crop insurance business. In addition, almost all crop insurance programs in the world are directly or indirectly supported by governments because of the risks inherent in agriculture, ”said Montemayor.

Regarding PCIC’s alleged losses, the FFF noted that the company is in fact financially stable and generates additional income through its investments to cover its overhead costs. The agency is also protected against extraordinarily large losses through reinsurance.

The FFF added that the DOF’s proposal to extend insurance coverage to other crops, livestock and agricultural assets has already been implemented by the PCIC.

He said that notably, PCIC has been deemed the largest government owned and / or controlled company in the past four years and has paid dividends to the government on its net operating income.



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