Nov 15 , KATHMANDU: Lack of awareness among farmers regarding special provisions for insuring crop and cattle through cooperatives is hindering them from optimising the benefits announced by the government.
“As per the Crop and Cattle Insurance Directive 2012 issued by the Insurance Board, farmers can enjoy additional 15 per cent discount on government provided subsidised amount if they insure through cooperatives,” Udaya Chandra Thakur, spokesperson for the Ministry of Agricultural Development (MoAD) told The Himalayan Times, adding, “But farmers are not aware of it all.”
Insurance companies, according to the directive, cannot charge more than five per cent premium on the insured amount for insurance of crop. The rate has been set at six per cent in the case of the cattle farming for commercial purpose and five per cent for cattle farming for domestic purpose.
Under the scheme, if a farmer has insured the crop with insurance amount of Rs 100,000, the total premium amounts to Rs 5,000. However, he would not have to pay more than Rs 500 in premium because the government bears 75 per cent of the amount, while the farmer gets 15 per cent discount if he gets insured through a cooperative.
This means 90 per cent of the premium amount is covered if a farmer gets insurance for crop and cattle through cooperatives. On the other hand, if the farmer gets insured on an individual basis, he would have to shell out Rs 1,250 as premium, according to MoAD.
With most farmers engaged in crop and cattle farming unaware of the provision, the MoAD had spent only Rs 60 million of the total Rs 120 million earmarked for insurance premium subsidy last fiscal. Hence, the budget for this fiscal has slashed the subsidy amount by 50 per cent compared to last fiscal.
The government has subsidised 75 per cent of the insurance premium charged by the insurance companies and farmers can get an additional 15 per cent discount if they insure through cooperatives, which means farmers will not have to pay more than 10 per cent of the premium. The government has been reimbursing the subsidised amount to insurance companies through MoAD.
The directive, however, has said that if the cooperative is also a group-agent of the insurance company, it has to choose between the discount or the commission. The insurance company can provide a commission of up to 15 per cent of the total premium to its agents.
MoAD, according to Thakur, is disseminating the information to farmers through the District Agriculture Development Offices, but the scenario of last fiscal is disappointing despite the huge subsidy.
“The directive issued by the Insurance Board in 2011 had first provisioned for subsidising only 50 per cent of the insurance premium through government coffer, but later the Insurance Board amended the provision and increased the subsidy to 75 per cent in 2013,” Thakur stated.
As the Agriculture and Water Resource Committee of the Legislature Parliament has directed the government to put mandatory insurance provision on the government’s Subsidised Commercial Agricultural Loan Programme for Youth, the MoAD has said that farmers stand to benefit significantly by insuring crop and cattle through cooperatives.