New Ways for Rural Finance? Livestock Insurance Schemes in Vietnam

This paper discusses the feasibility of a livestock insurance scheme (LIS) in Vietnam, by analyzing the supply of LIS. The paper analyzes four different types of insurance providers:

• Insurance tied to credit within a:
  • State owned company,
  • Development project.
• A state owned insurance company;
• A private insurance company.

The paper states that:

• Livestock is an important household income source in Vietnam;
• Rural financial institutions in the country frequently finance livestock purchase;
• The absence of off-farm investment possibilities encourages investment into livestock production;
• Livestock death is, therefore, a main factor contributing to poverty;
• Farmers using credit to purchase livestock face two risks at once: losing the livestock due to disease, and subsequently, failure of the investment;
• A formal agricultural insurance market hardly exists in Vietnam and farm households have to rely mainly on informal mutual aid schemes.

The paper finds that:

• The supply of LIS in the market is low and relates mainly to small-scale schemes or very limited regions;
• There is no insurer in Vietnam offering an area-wide, sustainable animal insurance scheme;
• There are two problems plaguing all suppliers of LIS in Vietnam:
  • The limited availability and low reliability of data concerning livestock mortality,
  • The low quality of the public veterinarians.