Implementation of rice farming insurance to support food security and the willingness to pay (case study in Cinta Damai Village, Percut Sei Tuan Subdistrict, Deli Serdang District)

In order to increase food production, the government has made an innovation to protect farmers from the crop failure or damage risk by using the Rice Farming Insurance (AUTP) program. Agricultural insurance has been proven in many countries to successfully protect farmers from various farming risks. The presence of agricultural insurance is expected to play an important role in supporting economic activities in the agricultural sector, but unfortunately, this program has failed to run in Cinta Damai Village, Percut Sei Tuan Subdistrict, Deli Serdang District because of the farmers’ objections to paying the insurance premium. The purposes of this study were to see the actual implementation of the AUTP program and calculate the farmers’ willingness to pay (WTP) for the AUTP premium. The results of the interview were analysed and explained by the Statistical Description and then the farmers’ willingness to pay (WTP) for the AUTP premium was calculated. The results showed that the implementation of the AUTP program in Cinta Damai Village had gone well and smoothly, from the socialization to the claim settlement processes were almost completely according to the AUTP implementation guideline. The farmers’ expected average WTP (EWTP) value was 71,011 IDR/ha/growing season or 142,022 IDR/ha/year.


Introduction
As the main food commodity which is the staple food for most of Indonesia's population [1,2], the need for rice in Indonesia is so large and continues to grow every year in line with population grow th [3]. In order to increase food production to meet national needs, the government has made an innovation to protect farmers from the crop failure or damage risk by using a policy instrument in the form of the Rice Farming Insurance (AUTP) program [4]. The presence of agricultural insurance generally has an important role in supporting economic activities, especially in the agricultural sector [5]. Insurance provides certainty and protection for business activities from any business risks that may be faced [6]. Agricultural insurance is expected to be able to encourage farmers to prepare their farming plans better [7].
Agricultural insurance is an agreement between a farmer and an insurance company to bind themselves in the farming risks coverage contracts (especially for food crops, horticultural crops, plantation crops, and livestock) [8]. Rice Farming Insurance (AUTP) is a type of agricultural insurance that specializes in rice farming activities [9]. The AUTP program main objective is to provide protection to farmers in the form of working capital assistance in the event of crop damage or failure  [10]. By participating in the AUTP program, rice farmers, both landowners and cultivators are expected to be protected from losses due to crop damage or failure [11]. This protection provides them with a capital guarantee to c ontinue their rice farming business in the next planting season [12]. So that farmers can still run their farming business and cultivate rice again even after they experience crop damage or failure [11].
Agricultural insurance is actually not a new term in the agricultural sector development [13]. Many countries, especially developed countries, such as America, Japan, and several European Union countries, have used this policy instrument to maintain their agricultural production and protect their farmers from crop damage or failure risk [14][15][16]. The average insurance subsidy provided by developed country governments to farmers is 50-60% of the total insurance premium that must be paid by farmers [17]. On the other hand, the world insurance market has also show n very promising developments [18]. Agricultural insurance has been proven in many countries to successfully protec t farmers from various farming risks that arise due to changes in ecosystems and disruptions in the ecological balance [19].
The presence of rice farming insurance is expected to play an important role in supporting national food stability and security [20]. But unfortunately, this program has failed to run in many Indonesia regions because of farmers' objections to paying the insurance premium [21]. Many farmers feel that they do not need insurance and also feel burdened by having to pay a premium (although only 20% of the total premium should be), even though they actually have received a premium subsidy of 80% from the government. Much higher than the agricultural insurance premium subsidies provided by the government to farmers in developed countries [14][15][16].
The purposes of this study were to see the actual implementation of the Rice Farming Insurance (AUTP) program and calculate the farmers' willingness to pay (WTP) for the Rice Farming Insurance (AUTP) premium. The results of this study are expected to support the realization of national food stability and security by providing suggestions for stakeholders in order to formulate better agricultural development policies.

Methods
This research was conducted in Cinta Damai Village, Percut Sei Tuan Subdistrict, Deli Serdang District from August to September 2019. Cinta Damai Village was chosen as the research area purposively because it is one of the areas that participate in the Rice Farming Insurance (AUTP) program in Deli Serdang District, and also has the largest rice farm area, around 1,160 ha. AUT P has been implemented in Percut Sei Tuan Subdistrict since mid-2017. As the largest rice-producing area in North Sumatera Province, farmers in Deli Serdang District are the most interested to participate in the AUTP program [22].
To find out about the real implementation of the AUTP program, interviews were conducted with the Agricultural Extension Officers (PPL). Then interviews were also conducted with lowland rice farmers who had participated or were currently participating in the AUTP program. Samples were taken from the population of 1,500 lowland rice farmers in Cinta Damai Village [22]. The Slovin's formula was used to calculate the sample size as follows [23,24].  From the calculations, as many as 94 rice farmers were then interviewed using a questionnaire as the research respondents. The interviewed respondents were determined by the Non-probability Convenience Sampling Method [25].
To describe the AUTP program implementation from farmers' perspective, the respondents were interviewed about their knowledge of the AUTP program (10 questions), the information related to their farm (8 questions), their participation in the AUTP program (4 questions), and their w illingnes s to pay for the AUTP premium (2 questions). The results of the interview were then analysed and explained by the Statistical Description [26]. The farmers' willingness to pay (WTP) for the Rice Farming Insurance (AUTP) premium was calculated using the following formula [27].
Descriptions: EWTP = the expected average willingness to pay WTPi = the willingness to pay value at category i Xi = the number of respondents who are willing to pay at category i i = 1, 2, 3, …, etc; the number of willingness to pay categories TWTP = the total willingness to pay P = the number of respondents

Results and discussion
The farmers' participation of in the Rice Farming Insurance (AUTP) program in Cinta Damai Village could be grouped into two categories, namely farmers who were consistently participated in the program and those who were inconsistently participated in the program. The farmers' consistency was influenced by the stages of the AUTP program preparation and implementation they received. The acceptance level of rice farmers for the AUTP program preparation and implementation really depended on the role of the farmer group administrators and the AUTP program implementation team. Rice farmers' perceptions of the AUTP program could affect farmers' participation, where the farmers who were consistently participated in the program and those who were inconsistently partic ipated in the program showed different perceptions [28]. Activities in the AUTP program preparation phases began with area selection (area survey) and then continued with socialization. Meanwhile, the activities at the AUTP program implementation phases consisted of registration, subsidies disbursement, claiming, compensation disbursement, and compensation distribution.

Socialization of the AUTP program in the Percut Sei Tuan Subdistrict
The socialization of the AUTP program in Percut Sei Tuan Subdistrict was carried out by Agricultural Extension Officers (PPL), Department of Agriculture Deli Serdang District, and Jasindo Insurance. The socialization carried out by the Department of Agriculture Deli Serdang District was usually by inviting the heads of farmer groups or farmer group associations to the Department of Agriculture Deli Serdang District Office as the farmer groups' representatives due to limited time and space. Furthermore, the heads of farmer groups or farmer group associations were tasked with conveying the information they had received to their farmer groups' members. Agricultural Extension Officers (PPL) would also always convey information about the AUTP program in every activity they did with farmers to continue to instil in farmers about the AUTP program benefits and importance. The AUT P program socialization in Percut Sei Tuan Subdistrict was held at least three times a year.

Registration process of the AUTP program in the Percut Sei Tuan Subdistrict
Farmers who wished to register to become AUTP participants could report to PPL and then filled in a form containing the candidate name, address, land condition, and planting schedule. PPL would as s is t farmers in filling in the form and sign it. Then the farmer group head could deliver the forms along with the farmers' identity cards (KTP) and insurance premium payments to the Department of Agriculture Deli Serdang District. Rice farms that were insured under a farmer group mus t be in one land stretch. If there were farmers who were not members of a farmer group and want to ins ure their rice farm which was located on the same land stretch with the farmer group members, the farmers could still register as participants in the AUTP program through the farmer group head. PPL would assist the farmers to measure the farm area to be insured. Measurements were made based on the calculation of the seeds used on the land they were working on.
Rice farmers in Percut Sei Tuan Subdistrict were often late in submitting their identity cards (KTP) as a registration requirement for the AUTP program. Farmers often procrastinated in submitting KT P for various reasons. This could slow down the farmer registration process because the required documents were not yet complete, even though premium payments tended to be carried out on time by farmers. There were slight differences between the implementation of the AUTP premium payment in Percut Sei Tuan Subdistrict and the one stated in the 2018 Rice Farming Insurance Premium Subs idy Guidelines document. In the document, the premium was paid directly by the farmer to the bank account of the insurance company (PT Jasindo). However, in Percut Sei Tuan Subdistrict, the premium was paid by farmers to the Department of Agriculture Deli Serdang District along with the participant registration documents. Then the Department of Agriculture Deli Serdang District deposited the premium to the insurance company. The mechanism was implemented to make it eas ier for farmers to pay the AUTP premium. Farmers who had registered as participants and paid the premium would receive an insurance policy document within one month after the premium w as paid. Because of farmers paid the premium to the Department of Agriculture Deli Serdang District Office and not directly to the insurance company, the issued AUTP policy must be taken at the Department of Agriculture Deli Serdang District Office.

Claim settlement process of the AUTP program in the Percut Sei Tuan Subdistrict
Payment of claims for crop damage or failure compensation was calculated according to the level of damage incurred. The length of time required by the insurance company to approve a claim in Perc ut Sei Tuan Subdistrict was 10 days. Compensation money for crop damage suffered by farmers would be transferred directly by the insurance company to the bank account of farmer groups experienc ing land damage. Since 2018, only one farmer group had received compensation from the AUTP program in Percut Sei Tuan Subdistrict for land damage caused by drought.

The implementation of the AUTP program from the farmers' perspective
The results showed that based on their knowledge of the Rice Farming Insurance (AUTP) program, 100% or all respondents (lowland rice farmers) in this study (94 people) had participated in the AUT P program, had known the AUTP program since 2018, had known the function of the AUT P program, and also had known the procedures, the premium amount to be paid, and the claims amount to be received in the AUTP program. Based on information related to farming, all respondents in this s tudy planted rice 2 times a year. Based on their participation in the AUTP program, all respondents in this study had submitted insurance policy claims at least 1 to 2 times, were no longer the AUT P program participant, but still wanted to participate in the AUTP program if available in the future. Table 1a and 1b show the other descriptions of the farmers' knowledge of the Rice Farming Insurance (AUTP) program, information related to farmers' farm, and farmers' participation in the AUTP program. 100.00 Table 2 shows the farmers' willingness to pay (WTP) for the Rice Farming Insurance (AUTP) premium. As many as 47.87% of lowland rice farmers from 94 respondents were willing to pay the AUTP premium, while the remaining 52.13% were unwilling. Since the beginning, the farmers were willing to participate in the AUTP program as a condition for getting government assistance. Even s o, some respondents stated that they were willing to pay the AUTP premium because they had experienced or witnessed the program benefits first-hand. However, there were still more respondents who stated that they were unwilling to pay the AUTP premium. This was because they felt that the AUTP program should be a form of assistance from the government, so they should be exempted from paying the premium. Actually, they were uninterested to participate in the AUTP program, es pec ially if they had to pay a certain amount of premium to participate. This lack of interest was due to their low awareness of the AUTP program benefits. Figure 1 show s the trend of farmers' Willingness to Pay (WTP) for the Rice Farming Insurance (AUTP) premium, where the higher the value of the premium that must be paid by lowland rice farmers, the less the number of farmers who were willing to pay it.  Table 3 shows that the farmers' expected average WTP (EWTP) value was 71,011 IDR/ha/growing season or 142,022 IDR/ha/year. The farmers' WTP value for the AUTP premium was als o related to the farmers' enthusiasm and motivation to manage their farming risks. One of the AUTP program success indicators was that the farmers support the AUTP program implementation by willing to pay the insurance premium. When a farmer was willing to pay the insurance premium, it meant that he had tied himself up in the farming risks coverage contract, with Jasindo insurance as the implementing