Most farmers across the country are ignorant about the importance of agri-insurance
MAY 16
Insurance companies have decided to halt all agriculture-related insurance procedures as well as payments related to damage claims from next week until the government clears the subsidy arrears first.
This is indeed bad news for the agriculture sector that has been striving to become self-sufficient. The government had started gradually subsidising agriculture insurance fees from May 2009 in a bid to discourage imports and make the country self-reliant in agriculture. Quite contrary to the practices in the neighbouring countries, Nepali insurance companies have been doling out indemnity to the affected farmers even before the subsidies provided for the agriculture insurance fees are received from the government.
Over the past one decade, the accumulated arrears in subsidies have amounted to three billion rupees, according to the Nepal Insurance Association, despite repeated requests made to the related bodies to clear them. To make matters worse, Nepal Insurance Authority has revoked the subsidies given for agriculture insurance, putting the insurance companies at high risk should the government default on its commitment.
Year after year, farmers are having to suffer heavy losses that run into billions of rupees caused by unseasonal rains, droughts and landslides. Although the government allocates some funds to provide relief to the farmers annually, it does not compensate fully for the damagedone. Hence the need for agriculture insurance for the farmers. Agriculture insurance is still a relatively new concept for the farmers, and until they understand and can pay for the premiums, it is necessary for the government to partially subsi-ment to partially subsidise the insurance fee. Given the ongoing economic slump in the country, there are fears that the agriculture insurance subsidy might be axed permanently.
How can a farmer be encouraged to till the land when they have nothing to fall back on in the event of unexpected agriculture losses, which are becoming more the rule than the exception as climate change begins to impact the agriculture sector in ways not known or recorded earlier? Increasing agriculture output entails a lot of factors, including availability of timely inputs such as fertilisers, pesticides, mechanisation, irrigation facilities, and marketing of the produce, among others. All this calls for heavy investment, which will pay rich dividends only when the farmer is assured that his investment will not put him in debt as the insurance policy will bail him out should something unpredictable happen. Thus, an insurance policy could be a forerunner to a robust agriculture sector. However, the number of farmers signing up for agriculture insurance has not been encouraging despite more than a decade of its implementation.
Most farmers across the country are ignorant about its importance or even that such an insurance facility for them exists. Thus, the stakeholders would do well to inform the farmers about its need and how they could benefit from it. In the meantime, the government would do well to clear all its arrears to the insurance companies as halting the insurance procedure would be suicidal for the agriculture sector.
A version of this article appears in the print on May 17, 2023, of The Himalayan Times.
