Govt dragging its feet on agriculture insurance scheme


KARACHI: Although unprecedented floods have played havoc with the country’s agriculture sector, the federal government is proceeding at a snail’s pace with the farmer-friendly measures such as the National Agriculture Insurance Scheme (NAIS).
NAIS, an upgraded version of the now-mandatory Crop Loan Insurance Scheme (CLIS), is meant to devise a risk management mechanism for the farmers to even out agricultural risks and blunt the consequences of natural disasters to make losses, especially to the marginalized farmers, more bearable.
After the successful implementation of CLIS, the federal government in collaboration with the banks and insurance companies is inclined to introduce NAIS to provide the resource-constrained farmers with a shield against the unpredictable but backbreaking natural calamities.
The NAIS would enable the agriculturists to insure their borrowings from the commercial and microfinance banks with the scheme covering five major crops including wheat, rice, sugarcane, maize and cotton.
“Agriculture has always been vulnerable to the vagaries of nature… (and) the impact of natural calamities is always huge on the farming community,” the state bank noted adding “Non-availability of crop insurance has always been a key impediment in increasing the flow of formal credit to farmers.”
The long-awaited schemes like NAIS are now requiring special attention of the government in view of the recorded frequency in natural calamities in Pakistan, especially the recent floods that appeared to be most devastating for the agriculture sector, the only livelihood of poor agriculturists.
According to the State Bank data, between August 2008 and June 2010 the country witnessed and declared some 13 calamities that inflicted on the farmers not only huge losses of their produces, but also making them defaulting on the bank credits.
During the said period the insurance companies, like New Jubilee Insurance, EFU General Insurance, East West Insurance, National Insurance Company Limited, UBL Insurer, Metropolitan Life Assurance, United Insurance Company and Silver Star Insurance, paid some Rs 77 million to the banks under CLIS for settling the outstanding agriculture loans of the farmer borrowers till December 31 last year.
Whereas the CLIS is in place to protect some of the agriculturists, a majority of the framing community from the floods-stricken areas must desperately be looking at Islamabad for a reliable shield like NAIS.
Despite its tall claims and pledges, the government, however, seems interested more in politicking and less in swiftly responding to the post-floods miseries of farmers whose loses, according to preliminary calculations, have touched the $ 9 billion mark.
It was early this year when the federal cabinet had declared to launch NAIS for the small farmers saying the scheme would also cover the farmer borrowers of existing CLIS.
Later, in a meeting on May 31 the State Bank officials briefed the senior officials of ministries of finance and food and agriculture in the presence of Nazar Muhammad Gondal, Minister for Food and Agriculture.
The meeting advised the government to share the scheme with the provincial governments and relief commissioners before finalizing and implementing it.
Now, while the SBP Task Force has developed NAIS in collaboration with all stakeholders, the calamity-hit farmers seem far from reaping real fruits of the scheme. Thanks to the red tape and a visible lack of focus on the part of politically-belligerent democratic government.
The launching of NAIS would require the government undertake the prerequisites like a comprehensive database of the farmers, crops cultivated, cropping area etc.
When contacted the SBP officials told Pakistan Today that the central bank was still working on the most-awaited scheme.
“The agriculture ministry had proposed some changes in the scheme,” said an official privy to the matter.
The State Bank believes that measures like government support, streamlining of calamity announcements and automation of land record would play a critical role in the successful implementation of NAIS.