AN ECONOMIC EVALUATION OF A CROP INSURANCE PROGRAMME FOR SMALL-SCALE COMMERCIAL FARMERS IN SOUTH AFRICA / 'N EKONOMIESE EVALUASIE VAN 'N OESVERSEKERINGSKEMA VIR KLEINSKAALSE KOMMERSIËLE BOERE IN SUID AFRIKA

Abstract

Hail insurance is provided by the private sector in South Africa but crop insurance (drought insurance) programmes, after a promising start, failed to attract customers. A crop insurance programme (drought) for small-scale commercial farmers, who are not yet paying tax, has been recommended to government. The purpose in this research is to study the economic viability of such a programme drawing on the US experience. The US programme is well developed but heavily subsidised. During 1998 US growers paid $900 million in premiums while during 1995–98 the US government spent $1.2 billion per year on subsidies. An area insurance plan (farmers are insured as a group) is shown to be more appropriate for small farmers growing dryland field crops such as maize because risk is systemic (drought related) while adverse selection, moral hazard etc are overcome. Individual crop insurance will not be viable due to the cost of farm visits (verification of claims) and the non-availability of information. As a large part of the cost to government goes to administration of crop insurance it is recommended that an Income Equalisation Deposit (IED) scheme for small growers receive serious consideration with the government making a contribution as for example in Canada.

Boere in Suid Afrika kan verseker teen hael maar oesversekering teen droogte het gefaal. 'n Aanbeveling is aan die staat gemaak om gesubsidieerde oesversekering (droogte) aan kleinskaalse kommersiële boere wat nog nie belasting betaal nie beskikbaar te stel. Die doel met hierdie studie is om die ekonomiese lewensvatbaarheid van so 'n studie te ondersoek aan die hand van ondervinding in die VSA. Die program in die VSA word swaar gesubsidieer. Gedurende 1998 het boere in die VSA $900 miljoen aan oesversekeringspremies betaal terwyl die Staat se bydrae gedurende 1995–98 $1.2 biljoen perjaar beloop het. 'n Area-versekeringskema (boere word as 'n groep verseker) is beter as individuele versekering vir kleinboere wat droëland gewasse verbou soos mielies, omdat risiko sistemies (droogte bepalend) is terwyl dit ook die probleme wat normaalweg met oesversekering verband hou, oplos. Individuele oesversekering is nie haalbaar vir kleinboere nie weens die koste van plaasbesoeke (om eise te verifieer) en omdat inligting nie voldoende beskikbaar is nie. Omdat 'n groot deel van die koste van so 'n skema deur die Staat gedra sal moet word, word aanbeveel dat 'n Inkomste Gelykstellingsdeposito (IGD) skema ernstig oorweeg word, waar die staat 'n bydrae maak, soos in Kanada.