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Pakistan: Farmers give input to improve crop insurance

Source: Asia Insurance Review | Apr 2018

Pakistan Agriculture

Farmers are urging effective assessment of individual loss, quick settlement of insurance claims, increases in claim amounts and cover for horticulture as well, especially orange orchards and vegetable crops.
   In Pakistan, agriculture production challenges primarily stem from environmental and climate-induced disasters. Pakistan’s economy faced 133 natural disasters from 1995 to 2015, which caused losses of US$38.23 billion to the national economy, according to Ghamz-E-Ali Siyal, a research assistant at the Sustainable Development Policy Institute in Islamabad. 
   In an article in The Express Tribune, he said about 36 districts in the country are highly vulnerable to risks posed by natural disasters, 68 have medium vulnerability and 52 have low vulnerability against floods and droughts combined.
   In addition, farmers are facing issues of salinity, water scarcity and decreasing groundwater levels which slash their income from crop harvests. With the growing challenges, the demand for agriculture credit from the farmers has gone up in an attempt to improve their harvests. However, some loopholes have been found in the credit policy, especially in the Crop Loan Insurance Scheme (CLIS).
Crop Loan Insurance Scheme (CLIS)
The CLIS is a unique scheme launched in 2008. It provides credit for five major crops, namely, wheat, rice, sugar cane, cotton and maize. This is accompanied with insurance against natural disasters like flood, drought, hailstorm, pest attack and fire damage.
   With government support, the insurance premium is subsidised for subsistence farmers, defined as those having up to 25 acres of land for cultivation. However, some issues with the scheme were highlighted by the farmers during a survey conducted in Sargodha, which produces 90% of oranges in the country.
   For instance, some farmers are interested in insurance cover alone, but the CLIS offers crop insurance to only those who borrow from banks. In addition, some farmers do not consider the insurance policy to be in line with Islamic principles.
Highlighting the inefficiencies in the scheme, the farmers point to the late declaration of a situation as a calamity by the government as a major issue. After that, the bank or insurer concerned sends their representative or an independent consultant to assess the loss. This causes a delay of around six months.
   Owing to the delay, the assessment of field losses is not accurate. The assessors, most of the time, rely on prediction rather than actual data. After the assessment, disbursement of insurance claims takes at least another month.
   These drawbacks force the farmers to borrow from informal sources in order to plant their next crop.
   The money paid in insurance claims is also meagre that neither covers the loss suffered nor the input cost. 
   Moreover, political influence is another hidden factor as it plays a role in whether or not a village should be declared calamity-stricken. 
   Farmers also complain about lower resilience against natural disasters and climate change, which is the outcome of a lack of proper guidance by agriculture extension officers and an ineffective early warning system. A 
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