'Shield' protecting farmers

As climate change makes agriculture increasingly vulnerable, South Korea has built a 'shield' to protect farmers from the risks of natural disasters.

This is a comprehensive agricultural insurance model, operated systematically and humanely. After more than two decades, this policy has not only helped farmers weather storms but also paved the way for high-tech, sustainable agricultural development.

When natural disasters are no longer a nightmare

On a late June morning, a persistent drizzle fell on the rice fields of Naju County, Jeollanam-do Province – a fertile plain in southern South Korea. Kim Dong-su, 58, owner of a nearly 4-hectare rice and chili farm, stood on his porch, silently watching the heavy raindrops fall onto the embankment. “Ten years ago, every rain like this would keep me awake at night. Now I’m more at ease, because my fields are insured,” he said with a hoarse smile.

A vineyard in South Korea. Photo: Le San.

Mr. Kim's story is not just that of a farmer. It reflects a larger picture: South Korea's agricultural insurance policy, a solid pillar that helps farmers in the country produce with peace of mind amidst increasingly unpredictable weather.

Since the early 2000s, when climate change began to cause significant damage to agriculture, the South Korean government enacted the Agricultural Insurance Act. The program officially went into operation nationwide in 2001, initially applying only to certain crops such as apples, pears, and rice. The objective was clear: to reduce the financial burden on farmers when natural disasters occurred, while simultaneously encouraging them to invest in technology and more sustainable production. And this policy has been very successful.

According to the Korean Ministry of Agriculture, Forestry and Fisheries (MAFRA), as of 2024, more than 550,000 farming households participated in agricultural insurance, accounting for nearly 50% of crop-growing households and over 94% of livestock-raising households. The government and local authorities subsidize 50-70% of the insurance premium, up to 80% in high-risk areas, with the remainder shared between local governments and farmers. In high-risk areas such as the mountainous Gangwon region or the Jeolla Plain, the subsidy level can reach up to 80%.

Mr. Kim recounted that last year, a sudden hailstorm damaged more than a third of his chili crop. “Without insurance, I would have lost everything. But thanks to the crop insurance package, I received nearly 15 million Won (approximately 260 million VND) in compensation. The feeling of receiving compensation isn't just about the money; it's about the peace of mind knowing you won't be left behind when nature strikes,” he shared.

Thanks to agricultural insurance, South Korean farmers no longer have to live in constant fear of natural disasters. Photo: Le San.

Watching Mr. Kim leisurely make tea and check the weather forecast on his phone, I suddenly thought that perhaps the greatest benefit of agricultural insurance is peace of mind, even more so than monetary compensation.

In the heart of Naju town (Jeollanam Province), the National Agricultural Cooperatives Branch of Korea (NongHyup) is the unit directly responsible for implementing agricultural insurance nationwide. With her desk piled high with files, Park Mi-young, the agricultural insurance officer, carefully explains: “Agricultural insurance in Korea isn’t provided by a single private company. It’s a collaborative model between the government, NongHyup, and major insurance companies. The government issues policies, provides budget support, and controls risks, while NongHyup acts as the ‘arm’ directly implementing the program to individual farmers.”

According to Ms. Park, the agricultural insurance implementation process begins when farmers register at the local branch. Officers survey the area, the type of crops or livestock, and then assess the risk based on meteorological data and the average yield of the past three years. “Each type of crop has its own calculation sheet, for example, rice, pears, chili peppers, watermelons, or dairy cows. When a natural disaster occurs, we send people to the site to assess the damage and then process the insurance claim. The entire process is now 80% digitized, so it's much faster than before,” Ms. Park said.

The South Korean government also plays a crucial role in regulating and ensuring the sustainability of the insurance fund. Each year, the Ministry of Agriculture, Forestry and Fisheries (MAFRA) allocates a budget to subsidize farmers' insurance premiums and establishes a reserve fund to cover payments in the event of major natural disasters. If losses exceed forecasts, the government will provide additional funding to ensure uninterrupted insurance benefit payments to farmers.

Korean farmers view agricultural insurance as a valuable companion. Photo: Le San.

An interesting detail is that this system operates in parallel with the Agricultural Bank (NongHyup Bank) – where farmers can borrow capital for production. When participating in insurance, farmers receive preferential interest rates or loan conditions. “Many people see insurance as a ‘safety net’ that allows them to invest more confidently. We always tell farmers that planting crops is like driving a car, and seatbelts are indispensable,” Ms. Park said.

According to MAFRA statistics, as of 2024, there are more than 120 different types of agricultural insurance products being offered – ranging from crops, livestock, greenhouses to agricultural equipment. Each year, the total value of insurance benefits paid out exceeds 1.3 trillion Won (equivalent to nearly 25 trillion Vietnamese Dong).

Notably, South Korea did not develop agricultural insurance as a short-term welfare program, but rather viewed it as part of a modern agricultural development strategy. This policy is linked to digital transformation, satellite data, weather sensors, and early warning systems—all aimed at minimizing risks for farmers in production.

On the wall of Ms. Park's room, a wooden plaque bears the simple inscription: "No farmer should suffer alone." Perhaps that is the core philosophy that has allowed South Korean agricultural insurance not only to survive but also to become a familiar part of life in the fields.

Insurance is not a cost-gouging trap.

On a small road leading into the Gurye Valley in Jeollanam-do province, transparent glass roofs stretch like mirrors. Under the gentle early autumn sun, Lee Hye-jin (45 years old) is picking strawberries in her nearly 2-hectare garden. Her smile still holds a hint of shyness as she recounts last year's storm.

Thanks to agricultural insurance, South Korean farmers have confidently invested in agriculture, especially in the production of high-tech goods. Photo: Le San.

“In just one night, the wind was so strong it blew away the greenhouse roof. At that moment, I thought it was ruined because I had invested over 1 billion Won in this new system. But luckily, I had agricultural insurance. After NongHyup officials came to inspect it, just over three weeks later I received over 400 million Won in insurance benefits. Thanks to that, I was able to rebuild the greenhouse and continue production the next season,” said Lee Hye-jin, while removing the nylon ropes torn by the storm.

When asked about insurance premiums, Park Mi-young smiled and said, "They've increased, but not to the point where farmers will give up."

Insurance premiums are calculated based on the history of insurance benefit payments, the level of risk in the region, and the type of crop. If a household receives compensation for many consecutive years, the risk coefficient will increase by 5-15%. However, the government subsidizes 50-70%, and up to 80% in high-risk areas, so the actual increase borne by the people is very small.

If the damage is due to a widespread natural disaster, the premium for the following year remains the same, while households that implement risk reduction measures (installing awnings, sensors, changing crop varieties, etc.) receive a discount as a reward. "Insurance is not a trap to increase costs, but a safety framework that helps farmers become more responsible," explained Lee Hye-jin.

Ms. Lee is not an isolated case. In many rural areas of South Korea, natural disasters used to be the biggest fear preventing farmers from expanding their production. But since the agricultural insurance program was implemented, that fear has gradually given way to confidence.

According to statistics from the South Korean Ministry of Agriculture, Forestry and Fisheries, an average of over 25,000 compensation claims for agricultural damage caused by hailstorms, typhoons, droughts, or diseases are processed annually. As a result, farmers' reinvestment rates have increased by over 30%, particularly among younger farmers – who previously often abandoned the profession due to the high risks involved.

Korean farmers don't view insurance as a financial burden; instead, they feel more confident investing in agriculture. Photo: Le San.

Choi Min-ho (62 years old), a pear farmer in the Chungcheong region, recalls the days before insurance: "Every time a typhoon came, I couldn't sleep. Some years, all the fruit fell off, and I still had to pay off my bank loan. Now it's different; I feel much more secure. If there's a crop failure, insurance can help. The younger generation is also willing to return to farming."

I asked Mr. Choi if he thought insurance was a panacea. He laughed and said, "No, it won't make you richer. But it will prevent you from becoming poorer just because of a storm."

Many South Korean experts believe that the biggest impact of agricultural insurance lies not only in the amount of compensation but also in the change in farmers' mindset. When they no longer fear total loss, they dare to experiment with new techniques, invest in new varieties, and cooperate in large-scale farm models. This has helped increase the average productivity of South Korean agriculture by nearly 15% between 2010 and 2020.

The government doesn't take over the responsibility but plays a role in risk management and creating a legal framework. Insurance companies not only sell products but also work alongside farmers from forecasting to claims processing. Meanwhile, farmers, whether in the mountainous Gangwon region or the Jeolla plains, have access to information, data, and technology to proactively protect themselves.

Looking back at Vietnam, agricultural insurance programs have been piloted many times but still have limitations in terms of scale, awareness, and support mechanisms. It is thought that if we learn from the South Korean model, combining insurance, digital technology , and tripartite risk sharing, we can absolutely build a sustainable agricultural insurance system.

When technology and policy go hand in hand in the fields

On Gurye afternoons, as the sun sets over the greenhouses, you can spot many younger farmers, their phones in hand, checking the "NongHyup Smart Insurance" app – where they can monitor the weather, check their insurance policies, and even request online damage assessments.

A young farmer smiled and said, "Insurance is like a companion now. It not only protects us but also encourages us to think bigger."

And perhaps that's what has brought about a shift in farmers' production mindset – the most profound effect of agricultural insurance policies. At the National Agricultural Disaster Monitoring Center in Sejong City, large screens display weather data, rainfall figures, satellite imagery, and color maps of farming areas nationwide.

After more than 20 years of implementation, South Korean agricultural insurance has become a true "economic shield." Photo: Le San.

“This is where we forecast and provide early warnings of risks to make agricultural insurance more effective. Whenever there is a storm, frost, or drought, we update the insurance system with real-time data. As a result, assessment and compensation become much faster and more accurate,” said Han Jae-ho, Head of the Monitoring Department.

Since 2018, the South Korean government has been promoting the "Smart Agriculture + Insurance" program, which combines agricultural insurance with digital transformation. IoT sensors, greenhouse surveillance cameras, meteorological data analysis systems, and GPS positioning systems are installed everywhere. All this data is directly connected to the systems of the Agricultural Development Agency (RDA) and NongHyup, helping to identify risks early and support farmers in responding before damage occurs.

"We not only want to compensate farmers for crop failures but also help them prevent problems in advance. The goal is to transform agricultural insurance into a proactive risk management tool, not just a passive compensation system," said Mr. Han.

The South Korean government currently allocates over 500 billion Won annually (approximately 9.5 trillion Vietnamese Dong) to agricultural insurance. Of this, 70% is used to subsidize insurance premiums for farmers, while the remainder is invested in data systems, meteorological forecasting, and personnel training. Each locality – from Gangwon to islands like Jeju – has an agricultural support center staffed with engineers, insurance officers, and meteorological experts.

In Jeongseon County (Gangwon Province), Yoo Chang-bok, an agricultural official with over 20 years of experience, said: “We go to each village to guide people in installing weather alert apps and check their eligibility for insurance. Whenever there is late snowfall or unusual hailstorms, the government immediately notifies people so they can take photos of the scene and submit insurance claim requests directly on their phones.”

The collaboration between insurance companies, the government, and the shared responsibility of farmers forms a solid foundation for the strong development of agricultural insurance in South Korea. Photo: Le San.

The coordination between the central government, local authorities, and insurance companies ensures the entire system operates smoothly. When significant damage occurs, the government automatically activates the Emergency Support Fund, guaranteeing farmers receive payment within 30 days. As a result, in 2022-2023, despite South Korea being severely affected by Typhoon Hinnamnor and floods in Jeolla, the on-time insurance payout rate reached over 96% – a figure many countries should emulate.

On the large screen of the National Agricultural Disaster Monitoring Center in Sejong City, twinkling green dots of light appear, each representing an insured agricultural area. Looking at this, one can understand why South Korea has been able to maintain the stability of its agricultural sector amidst such harsh weather conditions. They possess not only policy but also technology and the perseverance of an entire system.

Kim Dong-su, a farmer in Naju, shared: “We grow rice, we grow chili peppers… we all know that the harvest is never guaranteed. But the most certain thing is that if something goes wrong, there will be someone standing by us.”

It was this simple belief that helped Korean farmers change their way of thinking about farming. They no longer viewed agriculture as a gamble dependent on the weather, but rather as an industry that could be planned, invested in, and protected through scientific mechanisms and policies.

After more than 20 years of implementation, South Korea's agricultural insurance program has become a true "economic shield." According to data from the South Korean Ministry of Agriculture, Forestry and Fisheries, this program helps reduce the average financial losses of farmers by 40% each year, while maintaining stability in the agricultural supply chain during years of major natural disasters.

Moreover, insurance also provides a foundation for high-tech agriculture because people are more willing to invest, businesses are more willing to cooperate, and banks are more willing to lend. Most impressively, South Korea combines three elements: the state, businesses, and farmers within a single unified mechanism. This model is considered by the OECD to be one of the three most comprehensive agricultural insurance systems in Asia (along with Japan and China).

Starting in 2025, the South Korean Ministry of Agriculture, Food and Rural Affairs (MAFRA) will expand its agricultural income insurance program from a pilot program covering nine agricultural products to serve all farmers for those products, while also adding six new products such as rice, napa cabbage, radishes, etc.

Additionally, MAFRA reports there will be five improvements in premium increases/decreases and coverage expansion, including new risks such as pests, lack of sunlight, and animal damage.

Source: https://nongnghiepmoitruong.vn/la-chan-bao-ve-nong-dan-d780312.html