Indonesia Promote the Rice Farming Insurance

Introduction
The agricultural sector is one of the key contributing sectors for the Indonesian economy,
therefore every farming and peasant business should have the right to protection, especially in
the face of various problems such as farming business certainty, price risk, crop failure, high
cost economy practices, and climate change. (Aziz, 2016)

Regarding Indonesia national mission make Indonesia as the world's food barn 2045. In order to
succeed the program, the government through Indonesia's agriculture minister and state-owned
enterprises together want to improve the national food sustainability and farmer’s welfare. Many
discussions to support the mission, in this paper will discussed about rice farmer’s insurance
including the mission, requirement and the mechanism.
The Framework
Starting from the concentration of rice production increase that has been implemented by the
government in 2016 with the national self-sufficiency rice program (UPSUS Swasembada Padi),
the implementation of rice production with a target of 75.13 tons in 2016. After the program is
evaluated, implementation is faced with the risk of uncertainty as a result of negative impacts of
climate change that harms farmers. To that end, the government through the minister of
agriculture held a program of protection and empowerment for farmers that have been published
in the Regulation of the Minister of Agriculture No. 19 of 2013 on the Protection and
Empowerment of Farmers and Regulation of the Minister of Agriculture No. 40 of 2015 on
Agricultural Insurance Facilitation. However, in implementation, there are too many constraints
that occur. Therefore, in 2017 the government will expand and promote legal regulations in the
implementation of rice farming insurance program (AUTP) and provide premium assistance to
farmers who participate AUTP. (Ministerial Decision, 2016).
The Mission of the Program
The government is paying attention to Indonesian farmers on risk on climate change, natural
disasters, and international trading fluctuations. These are the main factors that become uncertain
and the farmers' doubts to start farming. The mission through the program is to create farmers
aware of the importance of risk management in farming. Thus they will become more skilled
farmers of agricultural business and risk management. In the other hand, encourage farmers to
reduce dependence on subsidies or business capital assistance.
The government through AUTP has a mission for local government to develop the regional
economic improving the agriculture sustainability and food security. In addition, increasing local
government awareness of the importance of farmers' role and anticipating risks for agricultural
enterprises.
The government also set up a mission for the development of private sector. Opening new
business opportunities for insurance companies, improving regional insurance business climate,
improving worker ability in risk management for agricultural business. (Pasaribu,)
Mechanism of The AUTP
The source of the financing of the implementation of the rice farming insurance program
(AUTP) comes from the budget of state expenditure and the budget of regional expenditure. The
financing details of the insurance program implementation consist of physical financing in the
form of government premiums, operational financings such as expenses for meetings and travel
expenses.
The compensation is given to the participants of the AUTP in case of floods, drought or pest
attacks that result in damage to rice crops responsible for the condition of the age requirement of
rice has passed ten days after planting or age of rice has passed thirty days through the
technology of direct rice cultivation seeds. Add The damage intensity reaches ≥75% and the
extent of damage reaches ≥75% in each natural plot area.

Under the insurance program, the coverage is set at 6,000,000 Rupiahs per hectare per planting
season. Premium Rice Farm Insurance is a sum of money paid as a fee to get insurance coverage.
Total insurance premium of Rp.180.000 / ha / MT. The amount of premium assistance from the
government is Rp.144.000 / ha / MT and the rest is self-supporting farmers Rp.36.000 / ha / MT.
If the land area is insured less or more than one ha, then the amount of premium and
compensation is calculated proportionally.
The insurance policy is issued for one growing season with a period of time. The coverage
begins on the date of the planting estimate and ends on estimated harvest date.
Term and Conditions
The criteria for registering the insurance program are the farmers owning or not owning the land
which is working on the widest rice field of two hectares. The rice field carried out on irrigated
fields (technical irrigation, irrigation semi-technical, traditional irrigation, and swampland
received / lebak that already has a functioning water system) and land rainfed rice fields are
available for water sources (surface water and groundwater). Rice crops that can be registered
into insurance participants must be maximum rice plants aged 30 days.
The insurance AUTP will ensure damage to plants that are insured due to floods, droughts, and
attacks of Plant Disturbing Organisms (PDO). PDO which include plant pests: stem borers;
brown stem leafhoppers; peppered sage; rats; Spodoptera sp.; golden snails and plant diseases:
blast; brown spots; Tungrovirus; rotten stems; dwarf hollow; dwarf grass or yellow dwarf;
crackle. (Ministerial Decision, 2016)
Key Performance Indicator
To evaluate and measure the success of the program, there three factors used as key performance
indicators. The indicators used to measure the success of this activity are participants pay
insurance premiums, the distribution of premium aid to registered farmers, and premium
assistance is given to the farmers by following the aid distribution procedure in accordance with
the technical guidance on the distribution of rice insurance premium insurance that is regulated
in Ministerial Decision No. 15/Kpts/SR.230/B/05/2017 about Guidelines for Rice Farming
Insurance.
Risk Analysis and Control
Risks that may occur are: a) the target of realization of the distribution of premium aid is not
possible because farmers object to paying self-supporting premiums; b) less proper target of the
beneficiaries of insurance premium may be caused by inappropriate data collection process.
As for the solution that has been reviewed to carry out the insurance program. Handling efforts
in order to prevent the occurrence of risk: a) development of insurance guidelines for farmers; b)
socialization of guidelines to all stakeholders; c) assistance to the implementation of activities
intensively.
Conclusion
AUTP or Indonesia rice farming insurance program announced in order to provide protection to
farmers for improving the production of rice which is also as a national mission. Indonesia began
to move to advance all aspects with the aim of stabilizing national food security, food
sustainability and welfare of the people and economy.
Rice farm insurance is expected to provide protection to farmers if harvest failure occurs as a
result of flood risk, drought, and pest attack, transfer losses to other parties through insurance
coverage, and able provide education to farmers in managing risks and farming systems
the good one.
Rice farming insurance program is the beginning of agricultural insurance preparation nationally
and comprehensively for other agricultural commodities. Currently, the condition of the
government is still under study in an effort to issue a sustainable and structured agricultural
insurance program. However, the government continues to be optimistic to develop a legal basis
for AUTP as a national plan in recent years.
References
Pasaribu, S.M. (n.d.). Penerapan Asuransi Usahatani Padi di Indonesia: Alternatif Skenario
Melindungi Petani dan Usahatani. Badan Litbang Pertanian, Bogor.
Retrieved from http://www.litbang.pertanian.go.id/berita/one/1539/file/Asuransi-Pertanian-
Lindung.pdf

Aziz, A. (2016). Analysis on Management Mechanism of Agricultural Insurance in Indonesia

and The Potential Impact on State Budget. Journal Borneo Administrator, Vol. 12(1), pp. 69
Retrieved from https://media.neliti.com/media/publications/52286-ID-analisis-mekanisme-
pengelolaan-asuransi.pdf

Ministerial Decision (2016). Pedoman Bantuan Premi Asuransi Usahatani Padi Tahun Anggaran
2017. Ministry of Agriculture of the Republic of Indonesia. Retrieved from
http://psp.pertanian.go.id/assets/file/2017/Pedoman%20AUTP%202017.pdf