The World Bank (WB) is set to provide technical assistance to Bangladesh to expand agriculture insurance aiming to help improve farmers' resilience to shocks, official sources said.
"A well-designed agriculture insurance programme can contribute to the reduction of farmers' vulnerability to shocks and also support growth in agricultural productivity and credit," Christine E Kimes of the WB's Bangladesh Country Office wrote in a recent letter to the Economic Relations Division (ERD) secretary Mohammad Mejbahuddin.
She also said that the proposed technical assistance also complements the WB's ongoing engagement in the financial sector support project in Bangladesh.
Earlier, the ERD secretary in a letter requested the WB to provide technical assistance for investigating the potential of expanding agriculture insurance as a tool to improve the farm sector's ability to face natural calamity and farmers' access to agricultural credit.
In this regard, the WB will assess the current situation of agriculture insurance, including livestock and fisheries sub-sectors, make a preliminary assessment of market impediments, and discuss funding and potential next steps with the Finance Ministry officials and other key stakeholders.
A senior Finance Ministry official told the FE, due to adverse impacts of climate change, Bangladeshi farmers nowadays frequently face crop losses because of increased number of disastrous events.
He said farmers nowadays see their crops withering before maturity because of drought and in some cases, crops die because of salinity.
The official said in the absence of agriculture insurance schemes, poor farmers alone face the burden of crop losses which further deepen their miseries.
"Introduction of agriculture insurance schemes may help reduce the burden of crop losses on farmers," he added.
Meanwhile, the government is now implementing a pilot project, namely 'Weather Index-Based Crop Insurance Project', with financial help of the Asian Development Bank (ADB).
Under the US$2 million project, officials will develop new innovative crop insurance products that will give small-holder farmers in Bangladesh income protection from increasingly severe storms and natural disasters.
In April this year, the government of Bangladesh and the ADB signed an agreement aiming to design and pilot crop insurance products over a three-year period in selected districts, with the goal of providing coverage to at least 12,000 farm households.
According to an ADB release, Bangladesh is one of the most climate-vulnerable countries in the world due to its geography. There are estimates that agriculture's contribution to the country's Gross Domestic Product from 2005 to 2050 will be 3.1 per cent lower each year as a result of climate change.
The weather index-based crop insurance, which incorporates historical weather and crop production data, is considered to be more cost-effective and efficient than traditional agriculture insurance as it reduces farm-level monitoring and transaction costs.
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