Finance ministry to release Rs 20m to subsidize agri insurance

Kathmandu, April 22- Ministry of Finance is soon releasing Rs 20 million to subsidize insurance schemes on crops, livestock, poultry and fisheries.
The amount is being released as per the announcement made through the budget launched on April 9 by Finance Minister Shankar Prasad Koirala, which pledges to subsidize 50 percent of the premium amount paid by farmers and agriculturists to cover crops, livestock, poultry and fisheries they grow.

“We have already received a word from the finance ministry that the fund would soon be released,” said Prabhakar Pathak, spokesperson for the Ministry of Agriculture Development, which coordinated with the Insurance Board, the insurance sector regulator, to launch the insurance schemes.

Once the amount is released, the agriculture ministry will hand over the amount to the Insurance Board, which will then extend the amount to insurance companies that have issued insurance policies on agriculture, livestock, poultry and fishery, according to Pathak.

Earlier on January 14, the Insurance Board made it mandatory for all non-life insurance companies to come up with six insurance products, namely paddy, vegetables, potato, poultry (chicken and duck), fruits (orange and junar, a citrus fruit) and livestock.

Issuing the Crops, Livestock and Poultry Insurance Directive, the insurance sector regulator said the insurance schemes would provide relief to individuals and firms engaged in agriculture business, while paving way for banks and financial institutions to channel more funds into the agriculture sector, which has virtually remained neglected.

As per the directive, crops insurance will cover production cost involved in farming of all crops and horticulture until they are ready for harvest. This includes cost involved in purchase of seedlings and fertilizers, and labor charge, among others. However, insurance coverage will not be provided in case plantations are done on less than eight aanas of land in hilly region and one kattha of land in the Terai, the directive says.

Livestock and poultry insurance, on the other hand, will provide coverage to all types of cows, oxen, buffalos, yak, female yak, sheep, goat, swine, chicken and ducks based on amount fixed by the Insurance Board.

According to the Insurance Board, agricultural insurance policies can be bought from any non-life insurance company by paying an annual premium equivalent to five percent of the sum insured, except in case of commercial poultry, for which an annual premium equivalent to six percent of the sum insured has to be paid.

“But in case the insured plant, animal or fowl has a life span of less than a year then the premium amount will be calculated based on production cycle,” the directive says. Up to 15 percent of the amount raised as premium can be extended as commission to agents who sell these policies.

Just recently, the Insurance Board has also made it mandatory for all non-life insurance companies to sell insurance policies on fishery. Under this scheme, compensation will be given to farmers based on product or production value. This means insurance coverage will be provided based on market value of fully grown fishes or cost incurred in rearing fishes till the time of their harvest. The fishery insurance also provides cover to fish ponds.