DoF says there is no privatization for crop insurance company


Through Beatrice M. Laforga, Journalist

THE DEPARTMENT OF Finance (DoF) said there are currently no plans to privatize the Philippine Crop Insurance Corp. (PCIC), following concerns expressed by farmers that premiums will increase if the government withdraws from the industry.

“The privatization of PCIC is not being considered for the moment. However, the involvement of the private sector through tools such as agricultural risk reinsurance will be explored, ”Finance Secretary Carlos G. Dominguez III said on Sunday, in response to a report. Business world to question.

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

The national director of the Federation of Free Farmers, Raul Q. Montemayor, said the government may be considering privatizing the PCIC after Executive Decree (EO) No 148, signed on September 14, transferred the company from government-run crop insurance at the ministry’s DoF. of Agriculture (DA).

He cited the remarks of DoF Undersecretary Gil S. Beltran in May 2019, in which he first raised the idea of ​​privatizing PCIC and turning it into a reinsurer.

PCIC provides subsidized insurance protection to farmers against losses due to natural disasters and plant and animal diseases, especially for corn and rice.

“Without the subsidy, crop insurance will be prohibitively expensive, especially for small farmers … If the risk premium plus overhead costs are fully charged to customers, the premium will go up to 15% of the sum assured, “Montemayor said via Viber. Friday.

The farmers ‘group argued that EO 148 could make the insurer less responsive to farmers’ needs. He reconfigured the PCIC board of directors to make the secretary of finance president, relegating the secretary of agriculture to vice president and reducing the number of farmer representatives on the board from three to one.

“The transfer of PCIC took place without any consultation with stakeholders. The DoF clearly has an anti-farmer bias, it does not want to consult with the sector, and like Coco Levy, it does not want farmers to interfere in its affairs. By reorganizing the PCIC board of directors, he effectively changed the mandate and direction of the PCIC as originally defined in its charter, ”he said.

He maintains that the PCIC should always be primarily overseen by the DA to focus on its specific mandate of serving small farmers, rather than being run primarily as a financial institution.

“The DoF may be placed on the board to ensure the financial health of the PCIC, but placing the PCIC under the DoF and filling the board of institutions that are under the supervision of the DoF feels excess and is clearly a ploy. to take full control of the agency, ”Montemayor said.

Board members include the Chairman of the PCIC, the Chairman of the Land Bank of the Philippines, the Chairman and CEO of the Government Service Insurance System, a representative of the private insurance industry, and a representative of farmers.

In a message from Viber last week, Assistant Finance Secretary Paola Sherina A. Alvarez said the transfer to DoF was aimed at ensuring that the PCIC is “managed effectively for the benefit of the farming community.”

She said the PCIC would receive £ 4bn in grants next year, but added that the government must ensure that taxpayers’ money is used “efficiently for the benefit of the agricultural sector”.

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