By the end of this year, a crop insurance scheme is to be implemented in the agriculture sector in Bhutan. It will provide a hitherto absent safety net to the policy subscribers, among 70 percent of the country’s population, that are dependent on agriculture.
Ministry of Agriculture and Forests (MoAF) and the Royal Insurance Corporation of Bhutan Ltd (RICBL) are working under the Prime Minister’s directive to formulate the crop insurance scheme to financially protect farmers.
The scheme is expected to protect the policy subscribers against crop failures and damages due to weather, disasters, pests or diseases. This will ensure that farmers will always have capital for investment in the next season, no matter their harvest.
The particulars of quantification, valuation and coverage, like the insurance unit, premium prices, yield values, crop types to be insured and the type of disasters to be insured against are under discussion.
Insurance companies usually need at least 15 years of field data in order to formulate a scheme and MoAF is providing detailed information on yield per unit area, crop types and the frequency of disasters and damages to farms. After the details have been worked out, the scheme will be submitted to the government for approval.
Executive Director of RICBL, Sonam Dorji, said that the next step after government approval of the model would be to hold consultations at the grass roots level with farmers, and then start with the implementation.
RICBL is also liaising with companies around the globe for reinsurance so that the risks will be spread away from a single entity. The ministry will provide continuous support to RICBL, especially with investigation and reconfirmation of damages after the scheme is put into practice.
Currently, as and when disasters strike, the Department of Disaster Management identifies the farms that are most damaged, after which recommendations are put up to the government for compensation. Also, community insurance, in the form of risk pooling, is also practiced in some parts. It was found that such systems, however, are inadequate in their reach and scope for farmers and are a drain on taxpayers’ money.
There is also the problem that crop insurance ventures around the world inevitably face, which is the reluctance from farmers to buy policies, either due to high premium prices or a lack of awareness.
In Bhutan’s case, RICBL is confident that farmers will be willing to buy the policy. Sonam Dorji said that farmers around the country are aware of RICBL’s resources and reputation for reliability. He said that the scheme will be made as simple as possible for the benefit of the average farmer.
The Chief of Department of Agriculture, Chimi Rinzin, said that the question of help from the government, in the form of subsidies, will be looked into after the premium rates are fixed. He said that the target is to roll the scheme out before the year ends.
Many farmers have watched their investments and months of toil destroyed, within a matter of few days, by the increasingly erratic weather conditions, floods and droughts that have come with climate change in recent years. For low income and subsistence farmers are vulnerable, a failed harvest means lesser investment in the next harvest, in terms of farming practices and risk management, which means reduced consecutive harvests. Sometimes farmers are so afraid to take risks they even fail to capitalize during a good year.
“This is very exciting news for farmers and a huge landmark in Bhutan’s agriculture and our drive towards food sufficiency,” said the founder and CEO of Happy Green Cooperative, Sangay Rinchen, popularly known as ‘Farmer Sangay’. The cooperative has over 300 farmers across the country.
Farmer Sangay has been lobbying for crop insurance. He said in the absence of such insurance schemes, most farmers in Bhutan have had to form cooperatives to avoid risks.
“The growing risks have resulted in a reduction in the variety of crops that the farmers are willing to plant, and as a result the market is growing narrower. With this scheme farmers, like me, will be encouraged to plant a larger variety, and the diversity of our produce will be greatly improved,” Farmer Sangay said, adding that the start of crop insurance would greatly influence his decision to bring forward other Bhutan- made products alongside Happy Chips much quicker than initially planned.
Besides, crop insurance will also improve lives in the rural communities and encourage younger generations to stay back in their farms and invest in agricultural activities the long run. Currently, the rural-urban migration has left about 5,000 households empty (gung-tongs) from the 85,000 households in all 20 dzongkhags.
Due to no crop insurance, farmers who have taken loans from financial institutions are having a difficult time in paying their installments when crops fail. Therefore, many farmers are looking forward to the financial protection insurance payouts to improve their credit, and towards the growth of the agricultural and rural economy.