The Bhutanese Leading the way.
During the 5th Meet the Press, the Ministry of Agriculture and Livestock, along with the Ministry of Finance, addressed pressing questions about the establishment of the Crop and Livestock Compensation Trust Fund. Given the critical importance of supporting farming communities against climate-related losses, the government is developing an insurance scheme under the 13th Five-Year Plan to address the immediate needs of farmers facing extreme weather events.
The government acknowledges the necessity of insurance schemes but emphasizes the budgetary concerns. The Prime Minister said, “If the government bears 80% of the subsidy and farmers pay 20%, the annual cost to the government will be Nu. 2.3 billion. If the government bears 20% and farmers pay 80%, the annual cost to the government will be Nu. 0.560 billion. If the government covers 50% of the total premium as a subsidy and 50% of the total insured population participates, the estimated annual cost to the government would be Nu. 1.415 billion. Therefore, the government must carefully plan our rules, regulations, and policies, and once we are sure, we will start with the insurance schemes.”
Further emphasizing the challenges, the Prime Minister added, “Another challenge is determining who needs the insurance scheme. The underprivileged, who do not have the financial means, cannot afford to participate. If they cannot participate and their crops and animals are damaged, how will they secure money to avail of insurance? This is a significant challenge, and we cannot provide it for free to everyone, as it would cost the government Nu. 3 billion, an amount we cannot afford. We are conducting thorough research and will commence once we are confident, ensuring that the scheme benefits everyone.”
The Ministry of Agriculture and Livestock Secretary elaborated on the pilot project phase of the insurance scheme. He said, “When we start, the scheme will be introduced on a pilot basis, covering prioritized crop and livestock commodities such as paddy, maize, potato, orange, cattle, poultry, and piggery. The ministry believes this will ensure a smooth and effective implementation, with other commodities to be included later. We have consulted with insurance companies to develop the technical proposal and have discussed it within the ministry, including with RICBL and BIL.”
He said that the insurance scheme is designed with sustainability, effective implementation, cost-effectiveness for the government, and enhanced farmer responsibility to reduce losses in mind.
This approach reduces the annual financial burden on the government and provides a sustainable mechanism for compensating farmers. The proposed premium rates are 5.8% for crop insurance, 15% for cattle in the first year and 10% thereafter, and 10% for poultry and piggery. The proposal covers various perils, including natural calamities, weather, pests, diseases, and wildlife depredation.
He said, “We have made estimations if 50% of the farmers opted for premium insurance, they would bear the annual cost of Nu. 2.8 billion. Likewise, if the government provides a 50% premium subsidy and 50% of the total insured population participates, the estimated annual cost to the government would be Nu. 1.415 billion.”
