Jamaica’s banana and coffee industries have been battered almost to death by hurricanes and tropical storms. Since 2005 when Dyoll collapsed leaving the the industry without coverage, farmers have had challenges getting their production back to higher levels. In 2008, Jamaica Producers (JP) owners and operators of the Eastern Banana Estates cut their losses and shut down operation putting hundreds of farm workers out of work. JP, which accounts for about 90 per cent of Jamaica’s exports from two large estates, lost more than 76 per cent of their total production during the passage of Tropical Storm Gustav. In fact, declines in the productivity and earnings from the Jamaican agricultural sector have been the result of extreme weather occurrences, from drought to hurricanes and storms. Now there is some hope.
Crop Insurance hope on the horizon for Jamaica’s agriculture?
Some relief is on the horizon for Jamaican and regional farmers who have been forced to endure the effects of extreme weather events without crop insurance. The Caribbean Catastrophe Risk Insurance Facility (CCRIF) has signaled its intention to support the Caribbean Community’s (CARICOM) commitment to develop affordable agricultural insurance solutions.
Whilst the Facility is not specifically designed for agriculture and will not benefit farmers directly, Executive Director Dr. Simon Young noted that CCRIF, provides an opportunity for governments and their agents to access cost effective re-insurance for the agricultural sector.
“It will be up to governments and the private sector to build institutions and systems which can aggregate the farmer’s risk into a single portfolio, either at a sub-national, national or regional level, which CCRIF can then provide onward coverage against natural catastrophes,” he said.
Described as a “risk pooling facility”, CCRIF offers parametric insurance to member governments against the impacts of hurricanes, tropical storms, and earthquakes and come year-end, excess rainfall. Parametric insurance provides budgetary support payments to the affected countries based on specified intensities of the event and not on actual losses.
CCRIF remains the world’s first and only multi-country parametric insurance fund. It was designed to, Chairman Milo Pearson said recently, limit the financial impact caused by the devastation of hurricanes and earthquakes by providing “short term liquidity” when the policy is triggered.
Launched in 2007, following Hurricane Ivan’s devastation of the region, CCRIF was developed through funding from the Japanese government and capitalised through fees from its 16 member governments, the World Bank, the Caribbean Development Bank (CDB), the European Union, the governments of Canada, the United Kingdom, France, Ireland and Bermuda.
CCRIF’s newest tool is regarded as being critical to the development of parametric solutions for the agricultural sector. The synthetic excess rainfall model will provide rainfall data that will enhance the management of excess rainfall and drought risks. The tools could support local efforts to find suitable insurance instruments for local industry.
Crop insurance is “essential to making the business (farming) a success”, Director General of the Coffee Industry Board Christopher Gentles noted pointing to a World Bank funded study now being undertaken by the CIB. The study is to establish wind and rainfall patterns in the Blue Mountain in an effort to establish risk, design a suitable product and establish a pilot programme for the industry. Productivity and profitability of coffee and banana, two of Jamaica’s best export crops have over the years been severely impacted by severe weather events.
Crop insurance became less accessible after Dyoll Insurance crashed in 2004; following Hurricane Ivan’s devastation of the region. After Hurricane Katrina in 2005, re-insurance options to the region dwindled, because of its vulnerability to natural hazards. Crop insurance policies are now too expensive and are generally offered as non-catastrophic policies- providing no coverage against extreme weather events.
That CCRIF can successfully provide affordable coverage for regional agriculture lies in its targeted risk-management strategies and its ability to provide a “regionally-diversified portfolio to the international market” backed by a well-capitalised institution, Dr. Young explained. This is in direct contrast most domestic insurance companies that rely heavily on re-insurance, he said.
With heighted risk for catastrophic events as a result of Climate Change, Dr. Young said, that CCRIF could play a crucial role in the agricultural sector through the development of risk management strategies that focus specifically on the agricultural risk. At a CARICOM Symposium in June, Dr. Young committed CCRIF to providing technical support for capacity building, product design and education in the development of a specialised agricultural product. CARICOM has undertaken to provide a crop insurance scheme by year-end.
Since its inception, CCRIF has paid US$15 million dollars: approximately US$1million was paid to Dominica and St. Lucia after an earthquake in the Eastern Caribbean in 2007. The Turks and Caicos Islands received US$6.3 million after Hurricane Ike devastated Grand Turk, and Haiti received US$7.7 million following the January 12 earthquake.
CCRIF member states are, of Anguilla, Antigua and Barbuda, Bahamas, Barbados, Belize, Bermuda, Cayman Islands, Dominica, Grenada, Haiti, Jamaica, St. Kitts and Nevis, St. Lucia, St. Vincent and the Grenadines, Trinidad and Tobago and the Turks and Caicos Islands.