As climate change raises the vulnerability of our crops, AGRI-INSURANCE gains ground across Bangladesh
Bangladesh is one of the most vulnerable countries to climate disasters like floods, droughts and cyclones. As a country leaning heavily on its agricultural sector, farmers often face the risk of losses and damages to their livelihoods. For years now, insurance companies have struggled to quantify actual damages and risks associated with the effects of climate change due to a lack of comprehensive data. Slowly but surely, this scenario is changing and more and more financial institutions are coming forward to provide insurance to one of the many sectors severely affected by climate change- agriculture.
In September 2018, the Syngenta Foundation introduced almost 20 crop insurance products under its Surokkha project which was aimed to compensate farmers for losses resulting from harsh climatic hazards like hailstorms, floods, cyclones, heavy, off-seasonal rain and droughts. It encouraged farmers to protect Aman and Boro rice crops, as well as potato, maize and bean crops. Within the last 4 years, some 2,14,836 farmers enrolled themselves under agri-insurance schemes rolled out by Sadharan Bima Corporation and Green Delta Insurance Company Limited. The number was only 1526 in the fiscal year 2019 but has climbed exponentially since then.
These insurance companies provide more than just compensatory services. Farmers under this scheme receive regular weather forecasts and early warnings for approaching climatic hazards, as well as agricultural tips which can help them plan ahead, take suitable measures for minimal damage or even cut their losses and change crops. The policies are also supportive to the farmers in that they do not have to file insurance claims; the process is automatically initiated for them after certain climatic triggers appear on the companies’ weather indices. The companies simply need to look at the recorded weather data and settle claims for naturally caused damages. As per the recorded data, about 40 thousand farmers have already received compensation for claims amounting to BDT 20 lacs in the last 4 years.
The companies simply need to look at the recorded weather data and settle claims for naturally caused damages. As per the recorded data, about 40 thousand farmers have already received compensation for claims amounting to BDT 20 lacs in the last 4 years.
Syngenta’s Surokkha project is funded by the Swiss Embassy in Bangladesh and co-financed by Syngenta Foundation for Sustainable Agriculture. The underlying goal of the project is to create and promote risk mitigation buffers for faster and more meaningful adaptation to climate change. The insurance set up runs in 64 Upazilas of 16 districts in Bangladesh.
The vastness of Bangladesh’s agriculture sector and the range of implications of insuring make it impossible for the company to cover it with its existing capacity. Therefore, social support systems such as BRAC, Syngenta Bangladesh Limited, Eco-Social Development Organisation, Gram Unnayan Karma, GBK Enterprise, and EJAB Agro Limited have all joined forces to distribute and administer insurance products to farmers in need. Shubasish Barua from Impact Business and EVP at Green Delta mentions that they have been trying to bring farmers into crop insurance since 2013. After joining Syngenta, they have managed to reach lacs of clients, both inside and outside the foundation. Md Farhad Zamil, country director of Syngenta Foundation for Sustainable Agriculture in Bangladesh said that they have also been working to design products and schemes for farmers to help compensate them and build their resilience against climate shocks that have been hindering progress since 2016. With the help of different public and private partners, they have extended compensatory support to smallholder farmers and have realised that there are so many others to reach. They intend to scale up their operations across the country. The BRAC Microfinance has also been working with farmers, helping them with small, collateral free loans and insurance products, ever since 2016.
The agro-advisory services offered by the insurance companies are a blessing too. Those availing these benefits mention that they get weekly calls from the hotline number where they are advised on how to take care of crops and what kind of fertilisers and pesticides are needed for them. They are given weather forecasts and warnings ahead of time so that they can plan how best to minimise their losses. They are also educated on how to adopt a climate friendly farming system. Creative solutions are offered to minimise crop damage. For instance, a farmer from Thakurgaon Sadar Upazila was worried about the 2-day rainfall forecast in February. Since her main crop was potatoes, she was worried they would rot due to water accumulation. She was told to dig out a drain inside the potato fields to stop rainwater accumulation. Luckily for her, the idea worked and her crops were saved. The Syngenta Foundation added that some people were coming under the insurance umbrella only to get agricultural advice which helps them in the production of crops.
The Bangladesh Agricultural and Disaster Insurance Programme (BADIP) wishes to fuel the entrepreneurial potential of the country’s farmers in order to create more employment and income. It also sees this as the beginning of an inclusive insurance market and of an institutional and regulatory framework that will pull farmers up the income ladder.
Insurance policies, also known as products, are designed keeping crops in mind. The policies look into the crop yield-times as well as whether the conditions are conducive or unfavourable for their growth. Based on this information, weather indices are developed and policies are designed. For instance, for potato plantations, an insurance product called ‘Agam Bima’ has been created and it lasts for a 32-day period. A farmer under this coverage will pay a premium that is 5-6% of the estimated cost of growing potatoes on the amount of land they have. The projected cost of cultivating potatoes on a 1 bigha land is approximately BDT 20,000 which can be used as a reference figure. Insured farmers are eligible to claim 10-60% of the cost as compensation if conditions such as low to no sunlight prevail for 3, 7 or 15 days consecutively. In the case of paddy farming, insurance products consider excessive rainfall or high temperatures for long periods of time as the main risk factors and decide premium payments, policy timelines and compensation percentages depending on the data associated with those factors.
According to the Swiss Embassy in Bangladesh, the country still has a long way to go in building a strong institutional framework for the development of an all-inclusive insurance market, let alone the unique reinsurance capacity that is so important for agricultural and disaster insurance. However, the government sees the insurance market as an efficient and cost-effective tool which will encourage farmers to stay in the profession of farming and invest in higher value crops, and also give them some relief from the high vulnerability associated with their chosen livelihood of agriculture. The Bangladesh Agricultural and Disaster Insurance Programme (BADIP) wishes to fuel the entrepreneurial potential of the country’s farmers in order to create more employment and income. It also sees this as the beginning of an inclusive insurance market and of an institutional and regulatory framework that will pull farmers up the income ladder.
According to a 2016 study conducted by Centre for Injury Prevention and Research, a vast majority of about 55% of suicide victims of Bangladesh were farmers or agricultural labourers, choosing to end their lives in the face of climatic and economic conditions that repeatedly pulled them down. However, agriculture is a sector that generates livelihoods to billions of people around the world, and stabilises entire economies through ensuring food security at home and overseas. Bringing this crucial sector under the insurance umbrella is the best way to reduce unpredictability surrounding the agricultural sector, especially in climate vulnerable areas of the world, strengthen their resilience to climate shocks and consequent losses, and boost productivity in the sector for them to contribute in a more wholesome manner to their economies. The increase in agro-based insurance policies in the country, especially for smallholder farmers, and at least to minimise climate associated risks to their livelihood is a glimmer of hope for this vulnerable group of people. And the fact that farmers are accepting the help with both hands goes to show how long overdue these initiatives were for this assistance-parched, marginalised lot.
