Smallholder farmers in the Pacific have no access to weather index-based insurances, while flooding is a real threat for them. Preliminary research in the region suggests that weather and agricultural data, and the exact locations of farmers is weak in the region.
In a report by the Agriculture Ministry in Fiji, it is noted that the worst damage for farmers could come from a flooding submerging crops for 2 or 3 days. It also states that after such event root crop prices could increase 2-3% and vegetable prices could increase 5-80%. This represents a double impact to a farmer – they have less income due to the failure of their crops and they have to pay more for food due to lack of supply. The report also states that if a weather index based agricultural insurance was developed to mitigate the risk of such events, it would be based on the principle of “low premium, low payouts”, offering just enough coverage to provide resilience to adverse agricultural events at an affordable price. It is most likely that this product would be based on abnormally detrimental rainfall during critical growing periods during the year.
The country’s capacity to collect, analyse, and report on weather data in support of any weather-based index must come from the Fiji Meteorology Service (FMS), a department of the Ministry of Rural and Maritime Development and National Disaster Management. FMS maintains the national data base with historical data on Cyclone intensity and tracks, rainfall events and drought. In addition to Fiji Met there are regional bodies based in Fiji that maintain weather data including SOPAC at South Pacific Regional Environment Project (SPREP) and the University of the South Pacific (USP). The Fiji Meteorological Office also maintained 38 weather stations collecting rainfall and other data, 29 of which were manually operated and 14 of which were automated (9 stations had both). Stations report data daily, and information is stored electronically, but often there are stations that do not report as a result of the irregularity of collection of this data by caretakers, or due to malfunction among automated ones.
Risk modelling
In 2012, the Pacific Financial Inclusion Programme (PFIP) assessed the feasibility of weather-index insurance. It concluded that the weather station density, as well as the reliability of the weather information infrastructure, was not sufficient to develop detailed rainfall-indexed products. The Applied Geosciences and Technical Division of SPC (SOPAC) have advised that most of Fiji does not have any topographic flood plain data, and where there is data, the highest resolution is 20 meters. This resolution is probably not refined enough to use for developing an insurance model and the development of sophisticated flood risk modeling is time-consuming and expensive. As a guideline for developing weather index-based agricultural insurance, there needs to be at least 20 years of historical daily data and the missing data should not exceed 3% of the total daily data set. It is also advisable that the weather stations are automated. The data available in Fiji does not meet these requirements.
The FMS can theoretically provide this data on a case by case basis for no charge to those who submit official requests; however, the process is time-consuming. This also represents two issues. Firstly, it is unclear whether the data available is of high enough quality and detail to develop an index-based insurance. Secondly, if a product was developed, the ability for an underwriter to get timely information from the FMS weather stations to trigger claims payments is doubtful. Timely payment of claims is essential for weather index-based insurances to be successful as farmers who suffer a loss need the payout as soon as possible.
Furthermore, demographic and agricultural data in Fiji are weak. PFIP could not locate any large-scale mapping showing concentrations of farming communities. Further, there are few examples of monoculture farming in Fiji, or farming on large scales. The average size per farm in Fiji is small at 3.9 hectares and farmers generally plant a mix of different crops. The existence of monoculture farming is a key requirement to development of weather index-based insurance schemes as different crops have different tolerances to weather. The mix of different crops planted by farmers in Fiji makes the designing of a policy with set loss triggers difficult.
The one agricultural product that does have data is sugar cane. Fiji produced 2.3 million tons of sugar cane in 2008, on 50,907 hectares of land. Crushing and exportation of the cane is managed by the Fiji Sugar Corporation Limited (FSC), which oversees the 14,000 active members of the Sugar Cane Growers Council (SCGC). The SCGC are interested to develop weather index-based insurances, but struggle with capacity constraints.
Source - http://ictupdate.cta.int
