“The farmer is central”. These four important words and similar pronouncements were echoed at the Agricultural Risk & Insurance Symposium which was held on Dec 7 – 9, 2009 in Georgetown, Guyana. This was the first symposium of its kind in Guyana and it was jointly executed by the Ministry of Agriculture (Guyana), the World Bank, and the Inter-American Institute for Co-operation on Agriculture (IICA). This important meeting brought together many local, regional and international figures to consider the planning and implementation of crop insurance for Guyanese who are involved in farming, fishing and livestock production. Crop insurance has not been a tool available to the industrious Guyanese farmers and fishermen who face manifold risks as they toil in the seas, under the sun and in the mud.
Risks in the agricultural sector are manifold and usually scare investors and insurance companies. Those in the agricultural sector have to deal with production losses due to droughts and floods, unavailability of suitable markets, human resource problems such as industrial unrest, lack of proper public policies, lack of access to finance, and even deadly piracy in the seas. Mr. John Tracey, who was representing the Bankers Association in Guyana, noted that there is usually low return on investments in agriculture. He admitted that the banking sector and agricultural sector are not suitably aligned as the state of investment in agriculture is not what it should be. This is quite an honest admission on his part for when we listen to or see ads from banks they promote loans for cars, homes and furnishings and even taking a holiday. One seldom hears or sees an ad for an agricultural loan.
Mr. Marc Ferland of La Financiere agricole du Quebec (FADQDI) expressed the view that the best initiative to start with is agricultural insurance and agricultural credit. These are two old tools that are very important for agricultural leverage. FADQDI offers crop insurance to farmers in Quebec. In Quebec agriculture is done under very difficult conditions and this is an indicator that farmers can work around various difficulties if they have the right tools for production. In Quebec they battle with floods, ice storms and drought. We also learnt from Mr. Charles Stutley, an agricultural economist (FAO) that crop insurance is available in the Bahamas. Mr. Stutley explained that the Bahamas has hurricane exposure every year and damage to crops, livestock and fishing is usually extreme. The Bahamas is a string of small islands and travelling from island to island is quite a challenging and expensive affair. Nevertheless this country has around 2,000 farmers. In the Bahamas a farmer can go to any Post Office and buy units. The crop insurance offered there is based on a “hurricane index”. Compensation is based on the number of indexes bought by the farmer. Mr. Pablo Valdivia of the World Bank, who also spoke at this forum, shared that five insurance companies offer crop insurance in his homeland Nicaragua where farmers often face hurricanes. Ms. Henrica Ferreira of the Windward Islands Crop Insurance (1988) Ltd (WINCROP) related that their company offers coverage for crop losses due to volcano eruptions and windstorms. The shareholders of WINCROP are farmers’ organizations and the profits of WINCROP go back to its reserves.
The banking and insurance sectors in Guyana need to take a cue from the above and hurry to the rescue of our suffering farmers. Development of agricultural insurance is a very critical need which must be addressed. Thus far in the history of our agricultural sector farmers have largely been bearing the burden of crop losses. Marginal handouts from the government have not and will not solve the problem. According to Mr. David Hatch who is the Associate Deputy Director General of IICA “disaster assistance by governments in many instances has proven to be a political tool which is often expensive and poorly administered”. We know this to be true from Guyana’s experience. This is not a suitable model. In his scholarly presentation Mr. Hatch warned “Without lending economic growth in the agricultural sector will always be marginal. Too many countries do not treat agriculture as an important activity. Because of this food crisis continues and will be with us for a long time”.
Guyana needs to prudently address the issue of food security. According to the 1996 World Food Summit “food security exists when all people, at all times, have access to sufficient, safe and nutritious food to meet their dietary needs and food preferences for an active and healthy life”. Low wages coupled with the high cost of basic food items is the reason why many go hungry in this land. The FAO estimated in June 19, 2009 that 1.02 billion people suffer from hunger, which is an all-time high. This is a moral disgrace. Hence there is urgent need to fix the agricultural sector. Conscious of this important need in the agricultural sector the AFC 2006 manifesto declares that under an AFC administration there will be “Increase micro financing for small entrepreneurs managed by NGOs or other non-banking financial institutions”. This will have to be the initial approach since most of our farmers are subsistence and semi-commercial farmers. Commercial farmers here are comparatively few. Insurance and banking experts say that their institutions are more disposed to offer assistance to semi-commercial and commercial farmers. The AFC believes that our subsistence farmers need to be taken care of as they significantly contribute to the availability of food on our table.
Agriculture is the foundation of our food source and it must be managed in a very co-coordinated way. For crop insurance to become an available economic tool for the farmer in Guyana there must be a coordinated approach which involves the government, the financial sector, programme leaders and the agricultural sector. The farmer should be the centre of our concern. And we must do all we can to keep him in farming. Efforts must be made to keep his farm open and not to shut his farm. Availability of low cost credit ensures this. When a farmer quits farming he is often not replaced.
Sewnauth Punalall
Executive Member-AFC
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