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July 2024

SECP calls for mandatory crop insurance programme

ISLAMABAD: Despite natural and human-induced vulnerabilities posing challenges to food security, livestock and crop insurance in Pakistan is almost nonexistent.

Out of a total of Rs553 billion gross premiums for the year 2022, the agriculture insurance premiums account for just Rs2.8bn.

The premium for the livestock sector remains at Rs800 million, the Securi­ties and Exchange Com­m­ission of Pakistan (SECP) said in a report titled “Securing Livelihoods: A Comprehensive Look at Crop and Livestock Insurance in Pakistan and the Way Forward’’.

The report highlights that the average number of insured animals a year was only 176,000, and that too are progressive farmers or dairy farmers who supply bulk quantities of milk to corporate companies.

There are two government-led crop insurance schemes and four private sector insurance schemes, including one ‘weather index insurance’ by JazzCash.

The SECP has suggested a mandatory national crop insurance initiative based on the recommendations outlined in the proposed National Crop Insurance Scheme by the task force formed under the Ministry of Commerce led by SECP.

The commission has highlighted that the government-led insurance sch­­emes cover around 14 per cent of farmers out of a total population of ap­­p­r­o­ximately 8.2 million.

There is a need for a nationwide livestock insu­rance programme tailored for individual farmers, with graduated subsidies for subsistence farmers.

The report also explores the potential integration of crop and livestock insu­rance into existing social protection initiatives like the Benazir Income Sup­port Program­­me (BISP) and analogous provincial programmes, a proactive approach to providing financial stability to small and vulnerable farmers.

It is emphasised that all these schemes are developed under a public-private partnership (PPP) model with a focus on subsidising the cost of the private sector insurers under a well-thought-out plan to gradually reduce the government subsidy/allocation to the extent of the viability gap and transition towards a market-based approach.

The report stressed that the contribution of the agriculture sector to the economy was 23pc of GDP, with 63pc of this share attributed to livestock. However, this sector faces significant risks, including climate change, floods, droughts, pests, diseases, and high input costs.

Published in Dawn, June 8th, 2024 QR Code

Published Date: June 8, 2024

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