Insurance proves lifeline for farmers as climate change tightens its grip
Print Edition
WHEN heavy snow and cold hit Ma Rongda’s tea plantation earlier this year, he was not as worried as he used to be.
“I bought insurance,” he said. For an annual premium of some 7,000 yuan (US$1,050), the 46-year-old received compensation of more than 220,000 yuan — enough to cover all of his production costs last year.
This is the second year that Ma and his fellow farmers in east China’s Anji County have had access to insurance. Before that, there are no policies available for tea growers.
As erratic weather has become the norm, insurance policies against losses from extreme weather have emerged in a range of agricultural businesses, from beekeeping to cattle ranching to seaweed farming. Many are proving hugely popular, thanks in part to government subsidies.
Officials say the number of buyers of agriculture-related insurance has more than tripled between 2007 and 2015, while the area of farmland covered by insurance has quintupled.
The fast expansion of insurance is just one thing China is doing to reduce what it sees as growing risks related to extreme weather and other climate change effects.
The country now requires infrastructure construction companies to take climate change into consideration when planning new projects. It has also developed an early warning system for extreme weather and taken up popular communications tools — such as Weibo — to send out typhoon alerts.
Over the past 20 years, one out of two people affected by weather-related disasters has been Chinese, according to the United Nations. Floods, droughts, typhoons and other natural disasters have cost China losses of 200 billion yuan a year, on average, since the 1990s, according to government statistics.
Payout for losses
“The weather is now getting really strange,” Ma said. “We used to experience extreme cold weather once every three years. But this year alone, we suffered from heavy snow and cold waves. It was a double whammy.”
The insurance he buys gives farmers an automatic payout for losses when temperatures drop to minus 0.5 degrees Celsius during harvest season.
PICC Property and Casualty Co Ltd has rolled out 39 products aimed at helping Chinese farmers handle climate change. Other firms also have come up innovative policies, both in design and the way they are sold.
Shanghai-based Anxin Agricultural Insurance Co Ltd recently teamed up with Taobao, the e-commerce site, to sell insurance against crop failures caused by strong winds.
There are also growing efforts to create insurance services for climate-related damage that is hard to measure.
Suzhou, to the west of Shanghai, is a major production hub for hairy crabs, an autumn delicacy in eastern China.
But since heat waves have begun more frequent, farmers complain that their crabs — and their wallets — have reduced in size.
Although traditional agricultural insurance covers the loss of crab production, insurance agents and crab growers often argue over the amount of compensation, said Lu Jihui, a spokesman for China Pacific Insurance Group Co Ltd. That’s because high temperature isn’t the only cause of smaller crabs, making it difficult to measure the actual damage.
To eliminate disputes, China Pacific Insurance has designed a product that links the rate of compensation with temperature peaks — and avoids time-consuming, labor-intensive damage assessments.
“Many crab growers in my village failed to break even this year, because of the adverse impact of high temperatures,” said Shen Wenrong.
He said his crabs were two-thirds normal size, but he stayed profitable in part because his insurance offset some losses.“Many of my neighbors plan to buy climate insurance next year,” Shen said.
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