"We have to start with rice and maize first because they are the country's most important crops and concern millions of farmers," said Ennoo Suesuwan, senior executive vice president of the Bank for Agriculture and Agricultural Cooperatives (BAAC).

BAAC will be a coordinator working with concerned government agencies and the Thai General Insurance Association. Insurance companies have agreed in principle to the plan.

At least four former cabinets have tried to launch such a plan but failed. The main problem was a reluctance to set up a special fund of Bt2 billion-Bt3 billion to subsidise the project. Although the fund's financial support will be divided 50:50 between the government and farmers, it was hard to establish the insurance project.

Ennoo said the BAAC and concerned government agencies in cooperation with the World Bank had made a detailed study and concluded that all expenses would be 100 per cent handled by farmers.

They are now conducting field work to draw up a "weather-index insurance". At the beginning the index will concentrate on drought and flood, which often hit Thailand.

The index will be used as a guideline not only to calculate insurance premiums but also to consider what are drought and flood levels suitable for the calculation of compensation , he said.

A field study of weather-index insurance for maize is being conducted in Nakhon Ratchasima, the country's main maize-growing area.

It shows that rainfall in the province of less than 30 millilitres will kill a maize crop.

The same agencies will draw up a flooding index in Phetchabun next year.

The crop-insurance policy will rely on evaluating losses and compensation payments. Most important is how to define drought and flood for mutual understanding as a reference for compensation.

Achara Pongvutitham

The Nation