ABSTRACT

The study evaluated the performance of the Philippine Crop Insurance

Corporation’s Rice Crop Insurance Program in selected towns of Oriental Mindoro.
Specifically, the study aimed to determine the awareness of farmer-respondents on the
program, evaluate the amount and duration of release of indemnities to the claimants,
assess the effects of Rice Crop Insurance Program on farmer-respondents’ access to
credit, determine the attitude of farmer-beneficiaries towards risk after availing rice crop
insurance, determine the patronage of farmer-beneficiaries in rice crop insurance, and
identify problems and provide suggestions and/or recommendations regarding the
program.

A total of 60 rice farmers participating in the Rice Crop Insurance Program in

Victoria, Naujan, Roxas and Bongabong were interviewed. Purposive sampling was used
to obtain sample respondents. Both primary and secondary data were used in this study.
In analyzing the data gathered descriptive statistics (frequencies, averages and
percentages in tabular representations) and statistical analysis were performed.
Rice Crop Insurance Program was created to facilitate a more ad hoc relief
measure in times of crop losses, improve creditworthiness, increase productivity and
stabilize farm income of the rice farmers. Sample farmers availed rice crop insurance
under Group Crop Insurance Scheme. In this, group of farmers borrow rice production
loans from PCIC accredited lending institutions and will be automatically given a
standard cover.
Farmer-respondents’ knowledge about the features of the program was merely
basic information yet it is important to understand how the rice insurance works.
Regarding the objectives of the program, farmers’ knowledge was concentrated only in
facilitating ad hoc relief measure (80%) and improving credit worthiness (20%). About
the risks covered by the program, typhoon (100%), flood (88%), drought (88%), rat
(90%) and tungro (80%) were identified by most sample farmers. In premium sharing
arrangement, all farmer-respondents were not aware in the exact premium they shared
because it was automatically deducted from their loans. Using analysis of residuals,
farmers were found to be aware of three out of four steps in the application process and
were unaware of the last step. For the knowledge in claims settlement, the first three steps
pointed out in the seminar (as a requirement to be a member of cooperative) were highly
familiar to farmers. The last three steps were not familiar to them.

Results showed that there has been a significant increase in the number of farmer-
respondents who borrowed from formal sources of capital after the program
implementation in the study area. It was found out that the program did not help farmers
in settling loan obligations, however, the small indemnity payments helped farmers in
minimizing their loan defaults.

PCIC delivered indemnities before the set days (60) with the longest time of
release of 51 days and a fastest of 17 days. Nevertheless, the study found out that there
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was a significant difference (P584) between the actual mean (P2,920) amount of
indemnity and the mean entitled (P3,504) indemnity payment that should be received by
the farmers under the program at five percent probability level. This means that a
substantial amount of the indemnity payment was being taken away from the farmer-
claimants. Yet farmers cited that instead of having portion of capitals to be wasted
whenever losses occurred, with indemnity payment at least some amount could have been
plowed back and would have not been irretrievably lost.

Majority (72%) disagreed that their fear regarding risks inherent to agriculture
was reduced because of the Rice Crop Insurance Program. Seventy-five percent of the
farmers disagreed that rice insurance program protected their investment from the natural
calamities, pests and diseases that can be associated to the small indemnity they received.
They also added that the crop insurance program did not influence their decision to use
more input and expand their farm area. Furthermore, all of the respondents claimed that
they were not being able to replant when crop damage occurred. This happened because
all the indemnities given to them were used in paying their loans partially.

Forty-eight (80%) of the respondents indicated that they were moderately satisfied
with the program since they received indemnity payments from the program that can
alleviate their situation even minimally when misfortunes occurred due to natural
disasters. Twelve (20%) farmers who were not satisfied complained about the amount
deducted for every loan they make which was the premium. Furthermore, farmer-
respondents concluded that they are willing to participate in the rice insurance program as
they are willing to participate in the farmers’ assistance activity offered by cooperatives
together with LBP. These findings indicate that the patronage of these farmers towards
the Rice Crop Insurance Program will continue as long as formal lenders would be
willing to offer loans.

Problems identified were as follows: farmers were having small indemnity,

cooperatives had increased loan defaults because some farmers failed to inform them of
changes in the documents resulting to forfeiting insurance coverage and disapproval of
possible claims, PCIC received weak subsidy from the government and the program was
tied-up to a government credit program that influenced the program implementation.

Cooperatives and PCIC employees should exert effort to educate farmer-

beneficiaries of the importance of completing necessary documents regarding processing
of claims. Feasibility of the same program for modifications in a way that it will not
strictly tie-up to the credit program needs to be tested. Only those “insurable risks” such
as typhoon while risks brought about by pest and diseases that create inaccuracy in
measuring the real amount of value of loss should be excluded to reduce overhead cost.
Possible new approaches in insuring rice either as a stand-alone package or in tandem
with this traditional scheme can also be studied.