REPUBLIKA.CO.ID, JAKARTA -- The Financial Services Authority (OJK) has stated that the scheme of agricultural insurance will secure farmers' purchasing power because it will protect them financially from the threat of crop failure.

"Agricultural insurance improves the purchasing power of farmers because they will have financial protection against the threat of crop failure," Deputy Commissioner on supervision of OJK, Dumoli F. Pardede said at the Soemitro Djojohadikusumo building on Thursday.

According to Dumoli, the agricultural insurance scheme, designed by OJK in cooperation with the Ministry of Agriculture, Ministry of State-Owned Enterprises and state-owned insurance companies (consortium) is really needed, given that agriculture is vulnerable to the adverse effects of climate change leading to crop failure.

Under the scheme, the insured in the rice farming sector are farmer groups (Poktan), which consists of farmers, who will carry out farming activities as a single unitary risk (anyone risk), as well as the insured object i.e. cultivated paddy fields processed by owners or cultivators of the Poktan members.

"The scheme applied is the Farming Rice Insurance, where 20 percent of the premiums are paid by farmers and 80 percent are paid by the government," he stated.

In a bid to apply the scheme, OJK has officially appointed the state-owned insurance company PT Jasindo (Persero).

Dumoli further said that the designation of Jasindo is only for this year, and the number of insurers can increase next year.

"In accordance with the law, only one of the state-owned companies is appointed, namely PT Jasindo, and it depends on Jasindo whether it accepts or not. I heard Jasindo wants to cover itself," he noted.

By accepting the appointment, Jasindo will receive a disbursement of insurance premiums from the government amounting to Rp150 billion. This fund will be used to protect six million hectares of farm land if the crop fails, Dumoli added.

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