The state-owned Bank for Agriculture and Agricultural Cooperatives (BAAC) says losses from rice insurance will increase to an estimated 1 billion baht this year from 819 million in 2016, mainly because of a recent flash flood in the Northeast.
In Sakon Nakhon alone, 900,000 rai of rice fields are projected to have been damaged by the flood, with 40% covered by crop insurance, said president Apirom Sukprasert.
He said 1.5 million rice growers this year took out crop insurance policies covering an area of 23.8 million rai, down from 27 million last year, as some rice fields were inundated shortly before the growing season started. Just 53 million rai was planted with rice this year, down from 56 million last year.
Some 224 million baht has been claimed this year, Mr Apirom said, adding that rice farmers in 2016 claimed 819 million for damage to 746,000 rai.
The BAAC is developing a model to allow the insurance coverage for rice to be increased to the level close to production costs, but farmers must pay a premium for the additional coverage.
The cabinet in June approved a rice insurance scheme for the first crop of the 2017 season, worth 2 billion baht. The scheme, run by the BAAC, covers six natural disasters: floods, drought, storms, cold, hail and fires.
Under the scheme, farmers receive compensation of 1,260 baht per rai, up from 1,111 offered last year, in cases where crops are damaged by natural disasters. They can further secure 630 baht per rai from damage caused by pests and diseases, up from 555.
The scheme charges an insurance premium of 97.40 baht per rai, down from 107.40 last year.
Even though the rice insurance compensation has increased this year and the government is contributing another 1,111 baht per rai to farmland in areas that have been declared disaster zones, the combined compensation is still far lower than the average production cost of 4,000 baht per rai.
Mr Apirom said the BAAC is also conducting a study to extend the service to other agricultural products, starting from corn and dairy cows, to be in line with Finance Minister Apisak Tantivorawong's policy, which would see crop insurance cover all major farm products.
Crop insurance on maize could be offered in a manner similar to that for rice, while dairy cows could have several options for protection, such as insurance for milk output and price.
