Effect of Agricultural Insurance Program on Income Loss Reduction: A Comparative Study of Upland and Lowland Farmers in Japan and the Philippines
Abstract
This paper aims to inquire how agricultural insurance can be an effective and efficient coping mechanism to prevent the poorest in remote rural areas of East Asia and the Pacific from falling into the poverty trap when faced with natural disasters. Field research was conducted to examine upland and lowland farmers’ experiences with agricultural insurance and program implementation by insurance providers in Japan and the Philippines. Secondary data such as online articles, journals, books, news and annual reports, and online websites of government insurance providers in the Philippines and Japan were collected. Primary data were analyzed using descriptive and cost and returns analyses. The results of the country case studies of the Philippines and Japan highlight the major differences between agricultural production and agricultural insurance systems. Agricultural insurance can be a standalone risk management tool for Japanese farmers because the Japanese agricultural insurance provider has sufficient capital from the premium payments it receives from its beneficiaries. In contrast, the main agricultural insurance provider in the Philippines has little capital due to the low premium payments it receives especially that only a few farmers sign up for its programs. For this reason, the company cannot make large compensation payments to its beneficiaries and cannot be used as a standalone risk management tool in the Philippines.
