LAHORE, July 22: Chief Minister Pervaiz Elahi on Thursday announced the launching of the crop insurance scheme for farmers having land holdings up to 50 acres.

Sponsored by the Bank of Punjab in collaboration with the East West Insurance Co, the scheme will provide cover to farmers against losses incurred because of drought, pest attacks, thunderstorm, hailstorm, heavy rains and other calamities.

"This is a historic day for the small farmers of the Punjab," said the chief minister at the launching ceremony at a local hotel.

Mr Pervaiz said farmers would be able to avail the insurance facility by paying additional 2 per cent mark-up besides the existing 8 per cent on production loans. The scheme also provided one year and up to Rs500,000 life insurance cover to the farmers.

He said the crop insurance scheme would help growers cultivate crops without fear of losses incurred through calamities. Farmers would get 50 to 70 per cent compensation in case of calamity so that they could make arrangements for the next crop.

The chief minister was pleased to see a number of farmers at the ceremony. "The BoP should hold such functions at bigger places," he said while referring to the people who were standing in the hall.

The Punjab government policies like downward revision of interest rate on agriculture production loans to 8 per cent and flat abiana (water rates) were aimed at strengthening the rural economy, he said.

"The agriculture sector contributes 70 per cent to the GDP. Poverty alleviation efforts can only succeed by focussing on the rural populace."

The chief minister said the government accepted to bear the financial impact of Rs450 million last year but waived agriculture income tax on land holdings up to 12.5 acres. The step benefited more than 98 per cent farmers, he added.

He directed the BoP management to also open branches in the five remaining tehsils of the province. "The bank management should also work on opening branches at union council level so that farmers in every part of the province could benefit from the schemes launched by the bank," he said.

The chief minister was optimistic that other commercial banks would also follow suit and launch crop insurance schemes.

Mr Pervaiz said the United Bank had also expressed interest in joining the agrimall project under way in collaboration with the BoP.

The chief minister said the bank should open branches in other provinces also, so that farmers there could also benefit from these agriculture credit schemes.

He asked the bank management to launch schemes for the development of livestock sector. "At present, Pakistan is the fifth largest milk producing country in the world. We should join hands to bring it to the third position," he added.

He asked the bank to extend loans to farmers for the purchase of cattle. This would give a boost to the livestock sector and help meet the growing meat and beef demand.

Eulogizing the package announced by President Gen Musharraf, the chief minister expressed the hope that it would go a long way in improving conditions in the agriculture sector.

Earlier, BoP chairman Shahzad Hasan Pervaiz said in his welcome speech that the bank earned a pre-tax profit of Rs1 billion last year.

He was hopeful that the volume of profit would reach Rs1.75 billion during the current fiscal year.

He said the bank had introduced schemes like house, corporate, SME loan and consumer loans to provide credit access to every segment of society. The bank would soon introduce a debit card and other electronic banking products, he added.

BoP managing director Hamesh Khan presented a souvenir to the chief minister on the occasion.

Punjab Agriculture Minister Arshad Lodhi, Agricultural Marketing Minister Qasim Noon, Finance Minister Bahadur Dareshak, Industries and Commerce Minister Ajmal Cheema and a number of administrative secretaries of various departments also attended the ceremony.