Separate co for launching crop insurance suggested
Sunday, 30 November 2008
Shakhawat Hossain
The commerce ministry has suggested formation of a separate company under public sector to introduce crop insurance in the country.
To effectively run such a company the government should subsidise the premium that the farmers will require to pay.
Terming the introduction of crop insurance policy is 'very challenging' the ministry said in a 'position paper' that only a dedicated and separate insurance company could successfully introduce such policy by offering a portion of the premium as subsidy.
"It will be a big problem for the local farmers to bear the cost of premium for running the insurance policy," said the paper that was prepared following instruction of the Bangladesh Better Business Forum (BBFF).
BBFF, a public-private body formed to make recommendations to the interim government, said millions of the country's farmers remain vulnerable to frequent natural calamities in absence of crop insurance policy.
In 2007 alone, local farmers lost rice worth US$600 million in consecutive floods in July-September period and a cyclone Sidr in November.
The BBFF said crop insurance is essential as the country's 48.1 per cent workforce is still dependent on agriculture sector that accounted for more than 20 per cent of the gross domestic product (GDP) in 2007-08.
The commerce ministry paper said it will be easier for a separate company to cover the crop insurance across the country if the government provides subsidy for the purpose.
Referring to Indian state-owned Agricultural Insurance Company and its role in running insurance policies among the farmers in that country, the paper said the Indian experience can be used in Bangladesh.
Although the BBFF has come with the idea of exploring crop insurance policy recently it has long been demanded by different sectors.
Even in last year, World Bank, the country's main development partner, suggested to the government to explore introduction of commercial index based on weather insurance.
The Washington-based multilateral agency said rural small businesses and farmers are unable to play their due role in growth and employment generation due to limited access to rural finance.
For every taka deposited or collected in rural areas by banks, only half of it is offered as loan in rural areas, the WB said.
Insurance sector experts said Bangladesh is among the first few countries in this region, which tried to introduce crop insurance in the past without any major breakthrough.
Sadharan Bima Corporation (SBC), the state-owned insurance agency, was entrusted with the implementation of a pilot project on crop insurance since 1979.
But the implementation of a research-oriented government supported project involving private sector insurance agencies was abandoned in 1995.
Several committees were subsequently formed and reports submitted for restarting a research-oriented pilot project with private sector participation.
But the proposed programme is yet to take any shape, they said.
The commerce ministry has suggested formation of a separate company under public sector to introduce crop insurance in the country.
To effectively run such a company the government should subsidise the premium that the farmers will require to pay.
Terming the introduction of crop insurance policy is 'very challenging' the ministry said in a 'position paper' that only a dedicated and separate insurance company could successfully introduce such policy by offering a portion of the premium as subsidy.
"It will be a big problem for the local farmers to bear the cost of premium for running the insurance policy," said the paper that was prepared following instruction of the Bangladesh Better Business Forum (BBFF).
BBFF, a public-private body formed to make recommendations to the interim government, said millions of the country's farmers remain vulnerable to frequent natural calamities in absence of crop insurance policy.
In 2007 alone, local farmers lost rice worth US$600 million in consecutive floods in July-September period and a cyclone Sidr in November.
The BBFF said crop insurance is essential as the country's 48.1 per cent workforce is still dependent on agriculture sector that accounted for more than 20 per cent of the gross domestic product (GDP) in 2007-08.
The commerce ministry paper said it will be easier for a separate company to cover the crop insurance across the country if the government provides subsidy for the purpose.
Referring to Indian state-owned Agricultural Insurance Company and its role in running insurance policies among the farmers in that country, the paper said the Indian experience can be used in Bangladesh.
Although the BBFF has come with the idea of exploring crop insurance policy recently it has long been demanded by different sectors.
Even in last year, World Bank, the country's main development partner, suggested to the government to explore introduction of commercial index based on weather insurance.
The Washington-based multilateral agency said rural small businesses and farmers are unable to play their due role in growth and employment generation due to limited access to rural finance.
For every taka deposited or collected in rural areas by banks, only half of it is offered as loan in rural areas, the WB said.
Insurance sector experts said Bangladesh is among the first few countries in this region, which tried to introduce crop insurance in the past without any major breakthrough.
Sadharan Bima Corporation (SBC), the state-owned insurance agency, was entrusted with the implementation of a pilot project on crop insurance since 1979.
But the implementation of a research-oriented government supported project involving private sector insurance agencies was abandoned in 1995.
Several committees were subsequently formed and reports submitted for restarting a research-oriented pilot project with private sector participation.
But the proposed programme is yet to take any shape, they said.