KATHMANDU, AUG 13, 2012
The Insurance Board (IB) has been mulling introducing agro insurance in a bid to cover agricultural businesses and farming to help commercialise agriculture. According to senior IB officials, the scheme will be formulated considering certain agro businesses popular in the country like fishery, dairy, poultry and cultivation of cash crops, among others.
The strategy, which is expected to be issued by the end of the second quarter of the fiscal year, will broadly determine the premium, the extent of the coverage and the different sub-sectors that will be covered.
“Although 80 percent of the country’s workforce is engaged in agriculture, commercial farming is yet to happen in the country,” said Binod Aryal, executive director of the IB. “Launching such an insurance scheme will help insurance companies by developing new products besides increasing investment in agro businesses.”
The IB will also be introducing a micro insurance strategy which provides insurance coverage up to Rs 100,000. The IB has sent the proposed scheme to the government. The cabinet is yet to give final approval.
The proposed insurance protection will not cover other agricultural production, especially commercial production. Deposit and Credit Guarantee Corporation has, however, given insurance coverage to the loans provided to small farmers by banks and financial institutions.
Businesses have been citing lack of agricultural insurance as the reason behind their reluctance to venture into the agriculture business. They have repeatedly pointed out that the risks associated with agricultural production needs to be mitigated through insurance in order to lure investments in the sector. Similarly, banks and financial institutions have said that lack of agricultural insurance has prevented them from extending loans to the sector.
Meanwhile, a 2009 study carried out by the World Bank (WB) pointed out that stagnation in the agricultural sector was the major reason behind the underdevelopment and poverty in the country and identified the need for innovative financial products to assist farmers in the management of agricultural production and thus contribute to increasing farm productivity.
The study entitled Agriculture Insurance Feasibility Study in Nepal has stated that insurance can facilitate access to agricultural credit on better terms as it increases the creditworthiness of farmers and other agents of the farm sector. Aryal said that the regulator was aware of the problems bedevilling the farm sector, therefore, they were keen to introduce the insurance guidelines.
IB chairman Fatta Bahadur KC said a high level-team led by the agriculture secretary was also preparing a procedure for agricultural insu-rance. “It will be drafted in such a manner that insurance companies will be interested in introducing different products under it,” said KC.
Source: The Kathmandu Post
The Insurance Board (IB) has been mulling introducing agro insurance in a bid to cover agricultural businesses and farming to help commercialise agriculture. According to senior IB officials, the scheme will be formulated considering certain agro businesses popular in the country like fishery, dairy, poultry and cultivation of cash crops, among others.
The strategy, which is expected to be issued by the end of the second quarter of the fiscal year, will broadly determine the premium, the extent of the coverage and the different sub-sectors that will be covered.
“Although 80 percent of the country’s workforce is engaged in agriculture, commercial farming is yet to happen in the country,” said Binod Aryal, executive director of the IB. “Launching such an insurance scheme will help insurance companies by developing new products besides increasing investment in agro businesses.”
The IB will also be introducing a micro insurance strategy which provides insurance coverage up to Rs 100,000. The IB has sent the proposed scheme to the government. The cabinet is yet to give final approval.
The proposed insurance protection will not cover other agricultural production, especially commercial production. Deposit and Credit Guarantee Corporation has, however, given insurance coverage to the loans provided to small farmers by banks and financial institutions.
Businesses have been citing lack of agricultural insurance as the reason behind their reluctance to venture into the agriculture business. They have repeatedly pointed out that the risks associated with agricultural production needs to be mitigated through insurance in order to lure investments in the sector. Similarly, banks and financial institutions have said that lack of agricultural insurance has prevented them from extending loans to the sector.
Meanwhile, a 2009 study carried out by the World Bank (WB) pointed out that stagnation in the agricultural sector was the major reason behind the underdevelopment and poverty in the country and identified the need for innovative financial products to assist farmers in the management of agricultural production and thus contribute to increasing farm productivity.
The study entitled Agriculture Insurance Feasibility Study in Nepal has stated that insurance can facilitate access to agricultural credit on better terms as it increases the creditworthiness of farmers and other agents of the farm sector. Aryal said that the regulator was aware of the problems bedevilling the farm sector, therefore, they were keen to introduce the insurance guidelines.
IB chairman Fatta Bahadur KC said a high level-team led by the agriculture secretary was also preparing a procedure for agricultural insu-rance. “It will be drafted in such a manner that insurance companies will be interested in introducing different products under it,” said KC.
Source: The Kathmandu Post
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