DoF says no privatization for crop insurance companies

NDRRMC.GOV.PH

from Beatrice M. Laforga, reporter

The Treasury Department (DoF) said there are currently no plans to privatize Philippine Crop Insurance Corp. (PCIC) after farmers feared premiums would go up if the government left the industry.

“A privatization of PCIC is currently not being considered. However, it is looking into engaging the private sector through instruments such as agricultural risk reinsurance, ”Finance Minister Carlos G. Dominguez III said on Sunday in response to a Business world Inquiry.

“Reinsurance will most likely allow coverage to be extended to more farmers, more crops and livestock,” he added.

Raul Q. Montemayor, national manager of the Federation of Free Farmers, said the government may be considering privatizing the PCIC after Executive Order (EO) No. 148, signed on Sept. 14, transferred the state crop insurance company from the ministry to the DoF Agriculture (DA).

He cited the remarks made by DoF Undersecretary Gil S. Beltran in May 2019, in which he first came up with the idea of ​​privatizing the PCIC and converting it into a reinsurer.

The PCIC offers farmers subsidized insurance protection against damage caused by natural disasters and plant and animal diseases, especially for maize and rice.

“Without the subsidy, crop insurance becomes prohibitively expensive, especially for smallholders … If the risk premium plus overhead costs are billed in full to customers, the premium is up to 15% of the sum insured,” said Mr. Montemayor via Viber Friday.

The Farmers Group has alleged that EO 148 could make the insurer less responsive to farmers’ needs. It has reconfigured the PCIC board to make the finance secretary chair, demote the agriculture minister to vice chair, and reduce the number of farmer representatives on the board from three to one.

“The transfer of PCIC was done without consulting stakeholders. The DoF clearly has an anti-farmer bias, it doesn’t want to consult the sector and, like Coco Levy, doesn’t want farmers to interfere in its affairs. By reorganizing the PCIC board, it has effectively changed the mandate and thrust of the PCIC as originally defined in its statutes, ”he said.

He claims that the PCIC should continue to be overseen primarily by the DA so that it can focus on its specific mandate of serving smallholders rather than being primarily run as a financial institution.

“The DoF can be placed on the board to ensure the financial health of the PCIC, but to put the PCIC under the DoF and fill the board with institutions under the supervision of the DoF smells like overkill and is unambiguous a trick to take full control of the agency, ”said Mr. Montemayor.

Board members include the PCIC President, the President of the Land Bank of the Philippines, the President and General Manager of the Government Service Insurance System, a representative from the private insurance industry, and a representative from the farmers.

In a Viber message last week, Deputy Treasury Secretary Paola Sherina A. Alvarez said the transfer to the DoF is intended to ensure that the PCIC is “effectively managed for the benefit of the farming community.”

She said the PCIC will be offering $ 4 billion in subsidies over the next year.

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