SEVENTEENTH CONGRESS OF THE )
REPUBLIC OF THE PHILIPPINES )

Third Regular Session )
SENATE
S.B. No. 1887 Rete

INTRODUCED BY SENATOR JOSEPH VICTOR G. EJERCITO

AN ACT
ESTABLISHING A MANDATORY CROP INSURANCE COVERAGE FOR SMALL
FARMERS, PROVIDING FOR A NATIONAL GOVERNMENT SUBSIDY, AND
FOR OTHER PURPOSES

EXPLANATORY NOTE

The Philippine Crop Insurance Corporation (PCIC) is a government corporation
tasked to implement and manage the government program on agricultural insurance.
Created in 1978 under Presidential Decree No. 1467, PCIC, initially, only covered
palay. Subsequently, corn and other crop insurance packages were added to the
program.

The government has provided subsidies to support the crop insurance program
and has been shouldering shares of insurance premiums of insured farmers. However,
this has not resulted to better outcomes in terms of alleviating the financial burden of
farmers. The current crop insurance program is often characterized by a low
penetration rate. According to a study of the Congressional Policy and Budget
Research Department (CPBRD) in 2012, less than 2% of the estimated 5.2 million
smallholder farmers are covered by the PCIC. This may be due to the fact that crop
insurance has only been mandatory upon farmers obtaining agricultural credit under
a loan program. Coverage remains optional on the part of self-financed farmers.
Furthermore, there is also low awareness among farmers on the insurance lines of the
PCIC and their terms and conditions.

Crop insurance is badly needed in a country being hit by an average of 20
typhoons annually. The Philippines is also exposed to EI Nifio and La Nifia, and pest
infestations like the cocolisap infestation in 2014. According to the data reported in
the Philippine Statistics Authority’s e Compendium of Philippine Environment Statistics
(CPES), damages in agriculture caused by natural disasters from 2006 to 2015
amounted to P225.6 Billion in total. This is reflective of how disasters and calamities



affect agricultural production in the country. Crop insurance is therefore important to
serve as a risk-mitigating tool to address the hazards of climate change.

Crop insurance is a must for a country like the Philippines where farmers are
the poorest among the various sectors of society. During devastation of disasters,
farmers are left in a sorry state; left with damaged agricultural produce.

This proposed measure seeks to develop a crop insurance program that will
ensure that small farmers and their crops are protected from negative impacts of
extreme weather/climate conditions, plant diseases and pest infestations, and other
disasters. This bill seeks to provide free crop insurance coverage for small farmers
owning or cultivating five hectares of farmland and a 50% insurance premium subsidy
for farmers owning or cultivating more than five but not exceeding eight hectares of
farmland. In an effort to help farmers in times of need, to improve agricultural
productivity, and to ensure food security, it is imperative to have a mandatory crop
insurance.

In view of the foregoing, the immediate enactment of this measure is earnestly
sought.

oS:

SENATOR JOSEPH VICTOR G. EJERCITO



SEVENTEENTH CONGRESS OF THE )
REPUBLIC OF THE PHILIPPINES )

Third Regular Session )
13 UL 25
SENATE
.B.No._1887 nr Ale

INTRODUCED BY SENATOR JOSEPH VICTOR G. EJERCITO

AN ACT
ESTABLISHING A MANDATORY CROP INSURANCE COVERAGE FOR SMALL
FARMERS, PROVIDING FOR A NATIONAL GOVERNMENT SUBSIDY, AND
FOR OTHER PURPOSES

Be it enacted by the Senate and House of Representatives of the Philippines in
Congress assembled:

1 SECTION 1. Short Title. — This Act shall be known as the “Crop Insurance
2 Program for Small Farmers Act of 2018"

SEC. 2. Declaration of Policy. - It shall be the policy of the State to promote
genuine inclusive growth and alleviate poverty. It is likewise the policy of the State to
Promote a just and dynamic social order that shall ensure prosperity, promote full
employment, a rising standard of living and an improved quality of life for all.

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7 In pursuit of this, the State shall develop a program that will ensure that
8 farmers and their crops are protected from negative impacts of extreme
9 weather/climate conditions, plant diseases and pest infestations, and other disasters,
10 _ thereby protecting crop production, ensuring food security and farmers’ livelihood.

pee SEC. 3. Crop Insurance for Small Farmers Program. - (a) The
12 Department of Agriculture (DA) in coordination with the Philippine Crop Insurance



1 Corporation (PCIC) shall develop a special Crop Insurance Program for Small Farmers,
2 guided by the following objectives:

3 1. Promotion of food security through palay and other crop production;

4 2. Provision of immediate support and protection to farmers incurring crop
5 losses due to extreme conditions; and

6 3. Alleviate the financial burden of farmers due to uncompensated losses.

7 (b) The Crop Insurance Program for Small Farmers shall operate under an

8 _ insurance framework including, but not limited to, the following:

9 1. The Philippine Atmospheric, Geophysical and Astronomical Services
10 Administration (PAGASA) shall be the primary reference weather station
sot from which observed weather parameter shall be obtained. Other reference
12 weather stations may include other weather stations accredited by PAGASA;
13 2. There shall be an identified trigger or threshold reference point to serve as
14 a basis of measurement wherein in case of an occurrence of a breach the
15 PCIC is obligated to indemnify and pay the required payout to the insured;
16 3. Phases of crop growth shall be covered by the insurance where a separate
17 trigger and payout may be determined;

18 4. The payout or the insurance payment shall be based on a pre-determined
19 schedule that takes into account the actual area planted; and

20 5. Any breach of the threshold reference point shall be the basis of any payout.
2 Declaration of a State of Calamity in a local government unit shall not be
22 required to trigger the obligation of the PCIC to the insured farmers.

23 SEC. 4. Terms and Conditions. - Within ninety (90) days after the effectivity

24 of this Act, the Department of Agriculture (DA) in coordination with the Philippine Crop
25 Insurance Corporation (PCIC), and in consultation with the Insurance Commission (IC)
26 — shall formulate the terms and conditions which shall govern a comprehensive
27 _ insurance scheme for the benefit of the farmers. The terms and conditions shall be



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published in the Official Gazette or in a newspaper of general circulation in the
Philippines.

SEC. 5. Insured Farmers under the Crop Insurance Program for Small
Farmers and Premium Subsidy. — (a) All farmers of palay and other crops owning
or cultivating eight (8) hectares of farmland and below shall automatically be covered
by the Crop Insurance Program for small farmers. Subsidy for insurance premiums
shall be determined by the following qualifications:

1. For farmers owning or cultivating five (5) hectares of farmland and below,

the National Government shall fully subsidize their insurance premiums;

2. For farmers owning or cultivating more than five (5) hectares but not

exceeding eight (8) hectares of farmland, the National Government shall
only cover and subsidize fifty percent (50%) of their insurance premiums.

(b) The DA together with the Department of Agrarian Reform (DAR) and PCIC,
in coordination with local government units, shall develop, maintain and annually
update a database of farmers covered under this Program, and determine their
qualifications as to the type of subsidy covered;

(c) The DA and PCIC shall develop a system for the processing and payment
of the fifty percent (50%) insurance premiums not covered by National Government
subsidy. Such premium may be paid in money or in a quantity of paddy the value of
which shall be equal to the amount of the premium due to the farmer, such value
being computed according to the current market price of the crop as determined by
DA.

(d) All farmers covered under this Act shall be deemed to have entered into a
contract of insurance with the National Government through the PCIC;

(e) Small farmers who are currently covered by an existing crop insurance shall
have an option to choose whether to remain under their existing crop insurance or be
covered by the Crop Insurance Program for small farmers.


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SEC. 6. Rate of Premium. - The rate of premium shall be determined by the
Board of Directors of the Philippine Crop Insurance Corporation (PCIC) subject to the
approval by the President of the Philippines.

SEC. 7. Source of Funding. — In accordance with Section 5(a) of this Act,
insurance premiums of small farmers shall be subsidized by the National Government.
The funding for this Program shall be deemed appropriated from the funds of the
Department of Agriculture.

Initially, the premium subsidy for the first year of implementation shall be
drawn on a month-to-month basis, depending on the actual amount of insurance
underwritten by the PCIC. Subsequently, projections of the premium subsidy shall be
submitted by the PCIC to the President, and upon the approval of the President shall
be included in the National Expenditure Program.

SEC. 8. Claim to Indemnity. — In cases where the identified trigger or
threshold reference point has been breached, the insured person shall submit a written
claim to indemnity in respect of losses incurred to the municipal agriculturist. The
municipal agriculturist shall then forward the written claim to indemnity to the PCIC.

The payment of the indemnity shall be in accordance with the terms and
conditions set forth by the DA and PCIC under Section 4 of this Act.

SEC. 9. Implementing Rules and Regulations. - The Department of
Agriculture, and the Philippine Crop Insurance Corporation, in consultation with
relevant government agencies and instrumentalities, shall provide the necessary
implementing rules and regulations within sixty (60) days upon the approval of this
Act. Such rules and regulations shall take effect after they have been made and shall
be published in at least two (2) newspapers of general circulation.



SEC. 10. Separability Clause. —If any provision of his Act is declared invalid
or unconstitutional, the remaining parts or provisions not affected shall remain valid.

SEC. 11. Repealing Clause. — All laws, acts, decrees, executive orders,
issuances, and rules 12 and regulations or parts thereof which are contrary to and

inconsistent with this Act are hereby 13 repealed, amended or modified accordingly.

SEC. 12. Effectivity. — This Act shall take effect fifteen (15) days after its
publication in the Official Gazette or in two (2) newspapers of general circulation.

Approved,