BANGKOK (Commodity Online) : Thailand said it will extend crop insurance programme for all its key farm commodities.

Speaking to newsmen here Thailand’s Finance Minister Korn Chatikavanij said the state owned Bank for Agriculture and Agricultural Co-operatives (BAAC’s) will expand the programme to cover all farmers nationwide.



BAAC's pilot project, initiated in 2008, offers insurance coverage to corn farmers in five provinces, where farmers qualify for compensation for lost crops if rainfall falls below set benchmarks.

Drought conditions have been declared in more than 60 provinces nationwide, and the Agriculture Ministry has already warned farmers that water reserves cannot cover a second rice crop this year.

The ministry and the bank would also consider the cost of expanding the weather insurance programme to other key crops, including tapioca, rice and sugarcane.

Analysts said, in some countries, the premium costs for insurance are paid by both the government and farmers.

Japan also has a government-run fund that will offer insurance if private insurers decline to extend coverage.

To help keep premiums at affordable levels, some countries implement "stop-loss" policies, where insurers accept losses up to a set limit with any additional costs accounted for by the government.

Only 756 corn farmers to date have purchased weather insurance this year, paying total premiums of 1.3 million baht. Damage claims settled to date total about 900,000 baht.

The General Insurance Association has designated Siam Commercial Samaggi Insurance as its co-coordinating agent with the BAAC for the programme.

For their part, corn farmers want the government to increase coverage under the programme from a maximum of 800 baht per rai to 1,800 to 2,000 baht per rai to help cover expenses.

Officials have previously indicated that raising insurance coverage would require doubling the current premium of 100 baht per rai, a fee that farmers want the government to accept instead.

Thailand has 6 million rai of land under plantation for corn. Annual subsidies for corn range from 3 to 4 billion baht per year.

The BAAC meanwhile has announced a special programme offering farmers affected by local drought low-interest loans of up to 30,000 baht each with a six-month grace period on repayments.

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