Improving the agricultural insurance program to enhance resilience to climate change: evidence from corn farmers in the Philippines

This paper comprehensively examines the good agricultural practices (GAP) adopted by corn farmers to enhance their resilience to climate change and its implications to the agricultural insurance program in the Philippines. The data used came from the 2012-2013 survey of 426 corn farm households from 12 villages in Isabela, Pangasinan and Bukidnon provinces where enrollment from the PCIC corn insurance program was substantial. Probit regression approaches were used to evaluate the determinants of the good agricultural practices and corn insurance adoption and the Poisson regression to analyze the factors that influence the adoption of several GAP. The authors find that pests and diseases and drought were the major hazards in corn production and farmers subscribed to crop insurance and adopted some good agricultural practices as measures to mitigate the hazards. The evidence indicates that credit and membership to farmers organizations positively influenced insurance subscription while distance to nearest market and the number of GAP adoption have negative effects. The number of good agricultural practices adopted by farmers are also very much influenced by household size, age, corn area, credit, farm distances to the nearest road, insurance and extension offices, cognition level and attitude towards GAP. The results also indicate the presence of moral hazards as farmers with insurance reduced their GAP, but farmers remained unaffected because of the premium subsidy provided by the government. Overall, the results suggest that broadening of the corn insurance market can be effectively undertaken by targeting borrowing farmers and those affiliated to farmers' organizations. With the increasing frequency of climatic events and incidence of pests and diseases in the country, policymakers may have to contend with the insurance support until the full effect of the GAP has been realized.