Puerto Rico’s Agriculture Insurance Program Fails to Address Storm Losses, Leaving Farmers Vulnerable

Neither the Agriculture Secretary nor the legislative commissions responsible for the agricultural sector, dominated by the Popular Democratic Party, have made efforts this term to update the Agricultural Insurance Corporation’s policies to reflect Puerto Rico’s current climate realities.

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Photo by Ricardo Arduengo | Centro de Periodismo Investigativo

Despite Puerto Rico’s agricultural sector having long complained that the Agricultural Insurance Corporation (CSA, in Spanish) policies only cover losses from crops damaged by hurricanes and not by storms, Agriculture Secretary Ramón González Beiró has not taken any steps during this term to address the issue by seeking legislation or coordinating with federal agencies.

After Tropical Storm Ernesto in August, González Beiró stated that expanding policy coverage “requires legislation” and assured that he would meet with lawmakers in the weeks following the event to discuss this issue. However, more than a month after the storm, those meetings have not occurred, the official acknowledged to the Centro de Periodismo Investigativo (CPI) during the Puerto Rico Farmers Association Convention on August 30.

In separate interviews, the chairmen of the agriculture committees in the House of Representatives, Jorge Rivera Segarra, and the Senate, Albert Torres Berríos, confirmed to the CPI that they have never received a request from the Agriculture Secretary to address agricultural insurance coverage. They also warned that these measures will unlikely be addressed before the year ends.

The Agricultural Insurance Corporation, created in 1988, has had the authority since 2002 to require insurance policies for all farmers registered with the Puerto Rico Department of Agriculture (DA) or those receiving government subsidies. However, while the insurance obtained through this corporation covers losses from major disasters such as hurricanes, abnormal droughts, and uncontrollable pests, it does not cover losses caused by storms or tornadoes.

González Beiró stated that, in addition to legislation, it is crucial for the Federal Crop Insurance Corporation (FCIC), part of the U.S. Department of Agriculture (USDA), to establish mechanisms to provide reinsurance, which would provide enough capital to cover those losses. The FCIC is the federal agriculture division that assumes part of the risk generated by the crop insurance managed by Puerto Rico’s DA.

Ramón González Beiró, secretary of the Department of Agriculture.
Photo by Víctor Luis Rodríguez Velázquez | Centro de Periodismo Investigativo

“It’s not just about amending laws; we need the FCIC to provide reinsurance. If I sell the risk and can’t reinsure it, when a storm in Puerto Rico causes the same damage to plantains and bananas as a hurricane, the Agricultural Insurance Corporation won’t have the funds to respond,” González Beiró said.

For the FCIC to consider these changes, the local Department of Agriculture must request an expansion of the policies managed by the CSA, the federal agency explained to the CPI in written statements. However, the FCIC clarified that in the past four years, they have not received any requests from González Beiró for these changes. The federal entity indicated that they only have records of two recent requests related to agricultural policies in Puerto Rico. The first case dates to 2022, when the Department of Agriculture requested to insure coffee plants that were six months old, instead of one year, as was previously the case. The second request, sent in 2023, sought changes in the insurance policy for pineapple crops. Both requests were approved.

The federal agency emphasized that if the Department of Agriculture wants to expand policy coverage and for the FCIC to provide reinsurance and premium subsidies to producers, they must submit a proposal for approval. They added that just as there is reinsurance for policies covering hurricanes, reinsurance could also be created to cover losses from storms if a formal request is made by the Puerto Rico Department of Agriculture.

González Beiró said that in September, FCIC personnel would visit Puerto Rico and that this issue would be one of the main topics during their meetings. The official did not explain why he had not made these efforts earlier.

Another option, according to González Beiró, is for the Puerto Rico Legislature to create a special fund to sell or reinsure these policies. However, this option was not proposed before the Legislative Assembly, said Popular Democratic Party Representative Rivera Segarra.

Tropical Storm Ernesto, which passed near Puerto Rico between August 14 and 15, brought 8 to 10 inches of rain, causing agricultural losses estimated at $23.5 million, according to the Department of Agriculture.

Storm Ernesto caused the loss of many banana plants.
Photo by Ricardo Arduengo | Centro de Periodismo Investigativo

The agency said the CSA only insures 5,100 acres of plantains out of the 12,000 acres of land dedicated to plantains and bananas in Puerto Rico, contributing around $100 million annually to the economy, just from direct farm sales. According to the DA’s latest 2020 records, Puerto Rico consumes 40 pounds of plantains per person per year, a 22% decrease from the 52 pounds per person consumed in 2017. Of that amount, 98.27% is produced on local farms, with the remainder coming from imported peeled and vacuum-sealed plantains.

González Beiró said he asked the Financial Oversight and Management Board for Puerto Rico (FOMB) to authorize the activation of $14 million from an emergency fund to cover the damages from Ernesto that are not covered by the CSA. The FOMB approved using these funds under the Agricultural Enterprises Development Administration on Thursday, September 26, and was notified through a letter sent to the Office of Management and Budget.

A Management Issue Neglected for the Entire Term

The Agriculture Secretary told the CPI that since taking office in 2021, he has been addressing the agricultural sector’s concerns about the limitations in the coverage offered by the CSA policies. However, he declined a follow-up interview request to elaborate on the initiatives he claimed to have undertaken during his administration to address the challenges of agricultural insurance. In previous statements to the CPI, he noted that farmers know these limitations and understand the risks of cultivating products like plantains and bananas in a territory frequently threatened by weather phenomena.

“The farmer knows they are buying a hurricane policy for plantains, bananas, coffee, and citrus. The farmer knows. I am a plantain farmer, and you almost resign yourself when a storm comes,” he said.

The official noted that expanding policy coverage to include storm losses could increase the insurance cost for farmers. However, he could not specify how much the policy cost would increase or the current cost. The CPI confirmed with at least four farmers that CSA and federal policies vary depending on the type of plantation, crop number, number of acres insured, equipment, or facilities.

Asier Roldán Ortiz, president of the Association of Banana Producers of Puerto Rico, explained that in his case, to insure 135 acres of land for his banana crop, he must pay $40,000 a year. Meanwhile, José Fabre, from Bananeras Fabre, told the CPI that he invests about $96,000 annually in insurance to cover 500 acres, of which $37,000 is to insure the banana farm.

Farmers with a policy under the CSA can also obtain catastrophic insurance at the federal level, which, while it does not charge a premium, requires an administrative fee of $655 per crop, sub-crop, per harvest, or plantation. The crops insured under the USDA’s catastrophic insurance include coffee, bananas, plantains, sugarcane, papayas, citrus fruits, breadfruit, avocados, mangos, passion fruit, pineapples, and vegetables. The losses must be caused by hurricanes or fire (only applicable to sugarcane), and in the case of flooding, only apply to vegetables not located in flood-prone areas or near rivers, according to Puerto Rico’s Laws and Regulations.

Fabre regretted that, besides not covering losses related to storms, the CSA policies don’t cover losses from tornadoes, which, although not common in Puerto Rico, have been recorded 15 times with low or moderate intensity since 2006, according to Le Ann Inglés, a meteorologist with the National Weather Service (NWS).

According to Inglés, the frequency of tornadoes in Puerto Rico can vary, as it depends on whether the phenomenon is seen and reported by the public. Fabre was affected by the tornado that occurred between Sabana Grande and Lajas in 2019, which caused $75,000 in losses.

“I lost part of the farm, and no one paid me anything. We had a planting of 22 acres of bananas that were completely lost, and no one paid anything, neither at the local nor the federal level,” he said.

Both farmers noted that the issue of agricultural insurance has been a constant debate between the industry and the government. However, they agreed that during González Beiró’s administration, there had never been a meeting where precise figures on the cost of the policies if coverage for storm losses had been expanded were presented.

Popular Party Legislators Fail to Take the Initiative

Contrary to the Agriculture Secretary’s statements, Representative Rivera Segarra said that although the issue has been addressed in several public hearings held by the commission, they have not received any request for a meeting from González Beiró this term to seek legislation to expand the coverage of this insurance.

“We haven’t received anything official from the Secretary. A bill could be filed at his request, but there have been no such approaches. There have only been conversations during other investigations and public hearings, like when the food security plan or the Regrow Program was evaluated,” the representative said.

He mentioned that the need to amend the CSA policy coverage was also discussed during the Finance Committee’s budget hearings when the Department of Agriculture’s budget for 2024 was analyzed.

“In that hearing, the chairman of that committee, Jesús Santa, asked what was needed to legislate the expansion of that insurance coverage, and we asked [the Department of] Agriculture to send us what was required, but that never arrived,” Rivera Segarra said.

The CPI asked the representative why those amendments had not moved forward without the agency’s request, but Rivera Segarra responded vaguely that “it’s complicated.”

“You have to remember that legislating agricultural insurance coverage involves federal considerations. You have to see which insurance agency is willing to pay for those types of losses in a place located in the middle of the storm highway,” he justified.

Popular Democratic Party Senator Torres Berríos, chairman of the Senate Agriculture Committee, also said: “From the Secretary, I haven’t received any recommendation to amend [the Agricultural Insurance law]. I have heard recommendations from different sectors to amend that law. We agreed that, in the last months of the legislative session, we would sit and talk about doing something robust and equitable. However, that was left pending. But we still have it in mind, especially considering what recently happened with Tropical Storm Ernesto.”

Torres Berríos noted that even if the issue were to be addressed through legislation, it would have to wait until the first legislative session of 2025.

“Since the four-year term is ending, if the Governor [Pedro Pierluisi] calls for a special session, it will be to address issues on his agenda; it would be in January when a bill to add coverage for [agricultural] losses not necessarily caused by a major disaster could begin,” the senator noted.

On September 13, Governor Pedro Pierluisi requested a 30-day extension from U.S. President Joe Biden for the formal submission of the Major Disaster Declaration request for Puerto Rico due to the damage caused by Tropical Storm Ernesto, based on the provisions of the Stafford Disaster Relief and Emergency Assistance Act.

The USDA confirmed to the CPI, “No, a disaster designation wouldn’t change what’s covered in the policy.”

The Urgency to Bridge the Gap Between Insurance and Climate Reality

The fact that agricultural insurance does not cover losses from all types of weather events discourages some farmers from seeing insurance as a cost-effective investment, said Mildred Cortés Pérez, professor of agricultural economics at the University of Puerto Rico (UPR). Farmers who receive DA subsidies are required to buy insurance. However, purchasing a policy is optional for those not receiving incentives or subsidies.

Cortés Pérez pointed out that there is a gap between insurance and the climatic reality that agriculture faces, distancing Puerto Rico from having a stable agricultural industry and moving toward food sovereignty.

“Farmers live day by day, and many of the crops are seasonal. They are very careful with their investments. For example, if a hurricane doesn’t come this year, they probably feel like they wasted money because only a storm [Tropical Storm Ernesto] came. They got nothing from that because even though there was heavy rain, the crops were damaged, but they didn’t receive anything from the policies,” said Cortés Pérez.

Roldán agreed, stating that if he calculated all the money he has had to invest in insurance over the past ten years, he would have enough funds to cover any losses caused by a storm or hurricane.

“I’m honest. From 1998, when [Hurricane] Georges passed, until 2017 with [Hurricane] María, it was like 20 years of paying insurance. If I had saved the amount of money I spent on insurance year after year during those 20 years, I would have had enough to cover my losses after María, and I would have had money left over. But it’s a lottery because maybe 20 years won’t pass until the next hurricane,” the farmer said.

The UPR professor noted that expanding agricultural insurance coverage to include storms would increase the cost of policies. However, this would also add value to the investment, as farmers would feel it’s worth insuring their crops or plantations.

“The more risks covered, the higher the costs [of the policies], but that will result in more people insuring themselves. If we think about it, hurricanes hit, but storms are more frequent here,” Cortés Pérez said.

She noted that if farmers were sure they could count on reimbursement for losses when storms make landfall, they would see insurance as an ally and not as a production cost.

“I get the impression that the cost wouldn’t be that high compared to the risk they take and what they lose. Some lose everything. Emotionally, they’re not ready to continue their agricultural work,” she added.

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