The Government wants to pilot an agricultural insurance scheme in somelocalities from July, but insurers are reluctant to get involved.

In newly ratified Decision 315, the Government said agriculturalinsurance aimed to cover farmers affected by natural calamities and cropand stock diseases.

However, the Ministry of Finance cannot issue guidelines until insurers themselves show interest.

"Agricultural insurance is undeniably necessary," said GeneralSecretary of the Vietnam Insurance Association Phung Dac Loc. "However,as production always faces the likelihood of damage, insurance companiesthemselves are at risk," Loc added.

Bao Viet Group,one of the country's leading finance and insurance companies, ceasedoffering agricultural insurance in 1999.

This wasbecause, after 15 years of implementation, no profits were made,according to Hoang Xuan Dieu, the group's agricultural insurancemanager.

He is seeking regulations on the types ofcompensation from the Ministry of Finance so his group can considercontinuing the service.

Insuring farm production can be difficult because of its small and separate nature and the ups and downs in prices.

Dieu said that finding insurance staff skilled in implementing a pilot project required great effort.

Twenty one provinces have been chosen to test farm insurance'seffectiveness in covering rice production and raising cattle, poultry,fish and shrimp.

"Last year, my family lost 40percent of rice production because of an invasion of rats," said ChauSi, a farmer in the southern province of An Giang .

"Insurance will encourage farmers to increase production," said NguyenHoang Khai, deputy director of Bac Lieu Department of Agriculture andRural Development.

Vietnam is a potentialmarket for farm insurance because of the high percentage of farmers.Seventy percent of the population lives in rural areas.

The current proportion of agricultural production insured is only 1 percent. /.