NATURAL calamities such as droughts, floods, cyclones, storms and landslides often hit farms, affecting crop production and farmers’ incomes. Poor-quality seeds, fake pesticides, spurious fertilisers, price crashes as well as an unreliable market for final products add to the vulnerabilities of the farming sector.

Besides unfavourable trade policies and price mechanisms, uncertain weather conditions due to the changing climate have emerged as phenomena affecting agriculture. These challenges affect farmers’ ability to invest in next season’s crops; the only way they can manage risks is by diversifying crop variety, sowing crops early and focusing on cattle breeding.

In the absence of other risk management tools, crop insurance offers the potential to overcome some of these constraints. It facilitates farmers’ access to the means of production and changes their behaviour by reducing uncertainty in the agriculture sector.

The government will pay 100pc premium for those who own five acres of land, and 50pc for those who own between five and 25 acres

On time payment of insurance claims after crop losses may help small landholders avoid selling out their assets — whether pieces of land or livestock — to recover from the losses and maintain their pattern of consumption of farm inputs.

Risk coverage also enables and encourages them to turn to riskier but more lucrative crops. A couple of attempts have been made in Punjab to introduce crop insurance, the most recent just a few months ago by the outgoing PML-N government.

But these schemes have been linked with agricultural loans from banks and can only be accessed by the 30 per cent of farmers who are able to secure bank loans. Under the scheme launched this April as a pilot project in four districts — Sheikhupura, Sahiwal, Lodharan and Rahim Yar Khan — growers of rice and cotton who have obtained agriculture loans (Crop Loan Insurance Schemes and e-credit) are qualified to register for it.

An official of the agriculture department says more crops will be included in the project when it will be introduced in other districts from the Rabi season onwards. As part of incentives for small farmers, the government will pay 100pc premium for those who own five acres of land.

The subsidy for payment of premium will be 50pc for those who own between 5 and 25 acres of land, he says, adding that the insurance coverage will be for the victims of floods, heavy rains, hail, drought, pest attacks and diseases.

The assessment of crop losses will be made on an average yield index basis in a tehsil or Unit Area of Insurance, reveals an official of the Crop Reporting Service— the agency assigned the task of overseeing the crop insurance initiative.

The government will publish online its assessment of the crop losses through a specified portal, which the affected farmers may approach through their respective computerised national identity card number, while the claim amount will be transferred to bank accounts of the victims’ through branchless banking, he adds.

Farmers, however, reject the initiative as a non-serious move and a political gimmick. “What else can be said about an initiative given by a government during its days in power, then calling it a non-serious plan undertaken with the election in mind?” says Ebadur Rehman of the Farmers Association of Pakistan.

“Success of the initiative will remain uncertain as one cannot say whether the next government will own the scheme or not.”

Questioning the official criteria for assessing the crop losses, he urges the authorities to review the loss-assessment basis as hail and windstorms usually do not affect a large enough tract to declare a whole tehsil as calamity-hit. Thus, the farmers of the area would fail to get compensation for their losses.

Adeel Kanju, a progressive grower from Lodhran, recalls that crop insurance schemes had been launched at least twice earlier, the last one by the Pervaiz Elahi government in 2004. For want of practical steps in conformity with the ground realities to implement them, the schemes could not succeed.

He laments that the governments that launched these schemes neither released official figures of the crop coverage these managed to provide, nor analysed the initiatives to improve their shortcomings, if any, to come up with a better project next time.

Published in Dawn, The Business and Finance Weekly, August 13th, 2018