By Sebastian Rodriguez
PIEDADES NORTE, Costa Rica, Feb 21 (Thomson Reuters Foundation) - When Vinicio Chaves started working in the fields 30 years ago, he never thought of insuring his coffee farm against wild weather. Now he sees it as a necessity.
In 2017, Tropical Storm Nate hit his farm in Piedades Norte, a small town in Costa Rica's Alajuela Province, felling guava trees and stripping coffee beans off the branches.
"It was the worst I've seen," Chaves said. "It was sad to see all the coffee thrown on the floor."
But he did not lose money from the damage, unlike in previous years.
The farmer was compensated for his losses through a "climate insurance" policy offered by the National Insurance Institute (NII), a state agency that is the country's main insurer.
Boosting agricultural insurance is important as climate extremes become more frequent on a warming planet, said a 2017 study by the Costa Rica-based Tropical Agricultural Research and Higher Education Center (CATIE).
Public finances are coming under strain as the Costa Rican government ends up subsidising disaster-hit farmers for their crop losses, it said.
Chaves said he would not risk another crop season without insurance, but he remains in the minority among Costa Rican farmers.
Less than 500 are protected by insurance against climate and weather disasters. Since 2015, when the NII launched the policy, uptake has grown more slowly than expected.
Even in the first year, which had the largest insured area as big rice farms tried it out, barely 2 percent of the country's agricultural land was covered, according to NII data.
Daniela Guevara, an agricultural economist at the NII, said the institute had struggled to promote the insurance, meaning most farmers still did not know about it.
Xinia Chaves, executive director of the Coffee Institute of Costa Rica (ICAFE), said growers like her had traditionally seen insurance as an unnecessary expense.
But that could shift as the climate heats up, she added.
Often storm-affected farmers who lost their plantations in regions like Perez Zeledon or Coto Brus restored them in the same vulnerable way, she said.
"They are assuming a very large financial risk," she added.
ICAFE has organised talks and workshops with foreign experts aimed at promoting insurance against extreme weather.
But the various efforts had yet to create an insurance culture among farmers, she added.
In Piedades Norte, coffee producer Chaves said insuring his 15 hectares (37 acres) was not too complex, and did not involve much paperwork.
He had the option to deploy "resilience measures" on his land, giving him a discount of up to 15 percent of the premium.
They included managing the water supply, erosion and garbage on his certified coffee plantations, as well as keeping workers' housing in good condition.
Such measures help protect farmers better against disasters in addition to having insurance, according to the NII.
Producers must also comply with basic conditions, such as knowing the size of their harvests in the last five years and not exposing their property to "avoidable risks".
The policy covers farmers against a drop in yields, plant damage and plant death caused by storms, droughts or floods, as well as indirect risks, including diseases like coffee rust.
The insurance is available for most crops and livestock and, as of this year, for poultry and tilapia fish farms.
Chaves said the cost of the monthly premium was "accessible" for small-scale farmers.
After Tropical Storm Nate struck, making his first insurance claim was a simple process, he added.
"They calculated how much production was lost per hectare and recognised that amount," he said.
Yet, while Chaves has seen good results from insurance, government support for agricultural losses after weather disasters has deterred others from following his example.
From 2001 to 2012, disasters cost the farm sector more than $100 million, with the government footing most of the bill, said a report by the Ministry of Agriculture and Livestock.
Francisco Alpizar, one of the CATIE study authors, said this kind of aid was unsustainable and prevented insurance from growing.
"As long as the state says, 'I'm going to protect you', nobody is going to take insurance," he said.
The financial burden on the government of climate-related disasters could be eased under the NII scheme, he added, as producers themselves finance the payouts through their premiums.
Marcelo Nunez, a researcher at the Inter-American Institute for Cooperation on Agriculture, said insurance programmes for farmers were still rare in Central America.
"Although the governments have made efforts, the hectares (of land) with agricultural insurance coverage are insufficient," he told the Thomson Reuters Foundation.
According to a 2013 report from the United Nations Economic Commission for Latin America and the Caribbean, the frequency of disasters in Central America tripled in the preceding three decades, while insurance penetration did not exceed 1 percent in that year.
Nunez said agricultural insurance had stagnated because insurers had not found it profitable, and producers perceived it as an unnecessary cost.
According to the NII, many private companies are moving away from offering such insurance because of the heavy logistics of inspecting farms and minimal financial returns.
"It's insurance at (cost) price," said the NII's Guevara, adding that the public agency, which is run as a company, did not make a profit from it.
Meanwhile, the institute is slowly moving forward with efforts to expand both the amount of land and the number of crops insured.
Late last year, it launched a campaign to raise awareness of the insurance policy among small-scale farmers, working with cooperatives and farmers' associations.
(Reporting by Sebastian Rodriguez; editing by Megan Rowling. Please credit the Thomson Reuters Foundation, the charitable arm of Thomson Reuters, that covers humanitarian news, climate change, resilience, women's rights, trafficking and property rights. Visit http://news.trust.org/climate)
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