Get to know Agricultural Insurance, Business Risk Protection for Farmers

Hail protection with hail net in wine growing and agriculture

Talking about insurance, many of us may still think that there is only life insurance, health insurance, work accident insurance, and education insurance. We need to know that there are many insurances related to the businesses we manage, for example, livestock, fisheries, agriculture, and others.

What is agricultural insurance? Agricultural insurance is an agreement between farmers and insurance companies to bind themselves to the risk coverage of farming businesses, especially food crops, horticulture, plantations, and/or livestock. Agricultural insurance is a strategy to fulfill food needs by protecting the perpetrators, namely farmers, and spurring them to continue to increase productivity.

To improve the protection of farmers in Indonesia, the government together with the DPR has enacted Law no. 19 of 2013 concerning the Empowerment and Protection of Farmers. In the law, it is stated that one of the efforts to protect farmers is agricultural insurance.

If referring to the FAO (Food and Agriculture Organization), the food and agriculture organization under the auspices of the United Nations, the types of agricultural insurance products include: first, crop insurance. Namely, groups of plants that can be included in crop insurance, namely food crops, horticulture, and plantations. 

Apart from protecting farmers, agricultural insurance is also closely related to farmers’ access to capital. The two cannot be separated in the same scope, namely farmer finance. 

Rice Farming Business Insurance Products (AUTP)

Jasindo has several insurance products that are supported by the government. In this case, what is provided is Rice Farming Insurance (AUTP) which protects farmers from the threat of crop failure risk as a result of the risk of flooding, drought, disease, and attacks by plant-disturbing organisms.

Here are the details of the AUTP product:

Premium: IDR 180,000 with government assistance, 80 percent of the premium becomes IDR 36,000 per hectare/ per growing season

Coverage: the maximum insured price is IDR 6 million per hectare.

Farmer criteria: sharecroppers or farmers who own a maximum of 2 hectares per registration.

Land criteria: irrigated land or rainfed land that is close to water sources and has technical, semi-technical, and simple irrigation.

Compensation :

The age of rice has passed 10 days after planting (DAT)

The age of rice has passed 30 days (table/gogo ranch)

Damage intensity  > 75 percent (more than equal to 75 percent)

Damage area  > 75 percent in each natural plot (more than equal to 75 percent)

Under the AUTP, rice farmers only need to pay a premium of IDR 36,000 percent per hectare per growing season, with a government subsidy of IDR 144,000 per hectare per growing season. If you experience a disaster, be it a flood or a drought, and are affected by pests and diseases, you can get compensation in the form of money of Rp. 6 million per hectare.

However, it should be noted that there are policy exceptions where agricultural insurance does not cover physical damage or loss to the insured rice crop which is directly or indirectly caused by or as a result of: first, fire. Second, theft and or loss during and after the occurrence of an event that is guaranteed by the policy.

Third, the insured’s intention, the insured’s representative, or another party on the orders of the insured. The intentional act of another party with the knowledge of the insured, unless it can be proven that this occurs beyond the control of the insured. Intentional error or omission by the insured or the insured’s representative.

Fourth, forest, bush, reed, or peat fires. Fifth, explosion through explosive type. Fifth, nuclear reactions include but are not limited to nuclear radiation, ionization, fusion, fission, or radioactive contamination, regardless of whether it occurs inside or outside the insured rice cultivation area. Sixth, earthquakes, volcanic eruptions, and tsunamis. Seventh, all forms of business interruption and similar financial losses.

Jasindo together with the Ministry of Agriculture launched an agricultural insurance registration application, the Agricultural Insurance Invasion System (SIAP). The digitization program uses IT applications. The existence of this SIAP application can certainly improve data presentation, facilitate farmer registration, and even overcome the problem of lack of personnel from Jasindo which had become a complaint in various regions.

In addition, with this application, document recording does not need to use paper or paperless so that blank documents will not be scattered. The presence of the insurance participant registration application system using IT is expected to be quickly implemented by all stakeholders such as district or city service officers and extension workers. Given that this era has become increasingly sophisticated, the registration process can run quickly. The realization of farmer participation will increase in the coming year.