The major players in Fiji’s coconut industry can attest to living with the uncertainty of natural disasters, and painful recovery from their widespread devastation. From tropical cyclones to heavy rain and strong wind, coconut plantations usually recover slowly, as farmers struggle with the financial loses, and try to find means and ways to mitigate future losses.

The frequency of tropical cyclones and its associated weather patterns is a vicious cycle that puts the agriculture sector on edge every year. After every disaster, the aim is to recover as quickly as possible, but this is often difficult due to the scarcity of accessible and affordable funds.

For Coconut Millers Pte Limited, a major buyer in Fiji of raw materials and exporter of coconut products, financial protection for their members in the form of insurance cover has been a long-held hope. This hope is now a reality, thanks to the UN Capital Development Fund’s Pacific Insurance and Climate Adaptation Programme (PICAP).

Because the benefits of the scheme were so clear, it didn’t take long for Coconut Millers to join the pilot project on parametric microinsurance product as an implementing partner. For the first time ever, farmers and affiliates of Coconut Millers will enjoy financial protection against the damage to their farms by natural disasters.

The company’s focal lead for the project, Veenal Kumar, explains the challenges posed by natural disaster such as cyclones:

“There was a major hurricane in the 1990s, Cyclone Winston in 2016. Last year we had TC Harold and TC Yasa. When it hits, the coconut trees are badly damaged. In the first few months after TC Yasa, we received some copra supply because some of the coconuts had fallen. But after that, we couldn’t see any fruiting on the trees, which means that over the next year and a half, we anticipated that we wouldn’t be getting supplies from farmers.”

Coconut Millers receives raw materials from as many as 100-150 farmers at its factory in Balaga, Savusavu. On its supply routes across Vanua Levu, at least 400-500 more farmers supply raw materials for processing at the factory.

According to Mr Kumar, farmers rely on coconut supplies for their income and when the trees are damaged and unable to bear fruit, their source of livelihood disappears. This is when the farmers are in most need of funds to meet daily expenses, rehabilitate their farms and restart operations.

Towards this end, the parametric microinsurance product offers a financial lifeline by providing farmers short-term benefits to take on small investments until the trees return a healthy supply of coconuts.

While the product has immense potential, the company feels that its future success it incumbent upon increasing financial literacy of farmers and its affiliates. “Financial literacy is something that needs to be ongoing,” Mr Kumar emphasised. “During our community drives, the majority of the farmers were iTaukei so we conducted training sessions in iTaukei. They had some questions about the product and later agreed to be part of the project.”

“We first need to teach people about three components — revenue, expense and savings — and explain the importance of risk management. When we talk about risk management, insurance comes in. These are the basics, otherwise it is unlikely that they will accept it at face value. We need to (teach) them from the ground level as a starting point. If you go straight into explaining big words in insurance, they will not understand properly.”

Reflecting on the possible strengths of the parametric microinsurance scheme, Coconut Millers believes that it would allow farmers to receive financial assistance immediately without the need for site checks, or assessment of damage. Instead, the farmers would receive insurance funds based on the category of the cyclone and its route/radius, which is unique.

However, the company noted that farmers who fall outside the radius of the cyclone are not covered, even if they face cyclone damage. Coconut Millers recommended that the scheme include farmers outside the radius of the cyclone route.

“Most coconut trees are tall. While flooding probably won’t cause damage, strong winds associated with cyclones could damage the trees and plantations. So, this needs to be taken into consideration when offering farmers insurance cover against natural disasters,” Mr Kumar shared.

In his view, this was vital for ensuring the insurance product was sustainable as more benefits and cover meant farmers would be interested in continuing premium payments for those products.

He noted that climate change was also a factor to consider when designing or developing new insurance products, particularly when climate change contributes to the emergence and frequency of climate disasters.

Moving forward, Coconut Millers plans to strengthen its partnership with farmers, who are vital for the sustainability of the industry. The company is also working on boosting its database of suppliers and farmers, noting that about 30-40% of farmers along the supply route were women.

This inclusion of marginalized members of the community in the supply chain was important as it allowed women, disabled persons and micro, small and medium enterprises to be part of the benefits that came with the product.

Coconut Millers also recommended increased partnership and collaboration with UNCDF during workshops and training sessions. The company feels that the presence of UNCDF representatives at its community awareness sessions would boost farmer confidence in the product.