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

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

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

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

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

This was because, after 15 years of implementation, no profits were made, according to Hoang Xuan Dieu, the group's agricultural insurance manager.

He is seeking regulations on the types of compensation from the Ministry of Finance so his group can consider continuing 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's effectiveness in covering rice production and raising cattle, poultry, fish and shrimp.

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

"Insurance will encourage farmers to increase production," said Nguyen Hoang Khai, deputy director of Bac Lieu Department of Agriculture and Rural Development.

Vietnam is a potential market 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. /.