Crop insurance

Crop insurance has, of late, found its long expected space in the country's insurance sector. Because of the vulnerabilities that essentially characterise farm cultivation in this part of the world, insuring crops against misfortunes from natural calamities was not easy to get going. However, at long last, crop insurance looks like a promise that the country's farmers could not predict even a few years ago. 
The situation of risk associated with crop cultivation is common to many countries in Asia and Africa, and hence exposure to uninsured risks is a major cause of low yields, slow growth and persistent poverty. Weather-related risks are hugely important for poor people in most developing countries as the estimated two-thirds of them depend on agriculture and natural resources for their well-being, says a World Bank report. This includes not only farmers whose income and consumption directly depend on agriculture, but also residents of rural areas whose employment and business incomes indirectly depend on successful agricultural outcomes. Uninsured weather shocks also affect farm workers, input suppliers, entrepreneurs and workers in agribusiness, and providers of non-tradable goods and services in the rural non-farm economy.
Although risk coverage in the agro sector did come up many a time, no insurance company in the country came forward with any suitable approach to address the matter. However, it's now good to learn that the government is going to introduce Weather Index-Based Crop Insurance (WIBCI) in Bangladesh as an adaptation tool to reduce the risk of climate variability and extreme weather vulnerability in the agriculture sector. State-owned insurer  Shadharan Bima Corporation (SBC) and the Bangladesh Meteorological Department (BMD) are going to  jointly implement a pilot project  on WIBCI funded by the government and the Asian Development Bank (ADB) to minimise crop-related risk due to adverse weather. "Farm income losses caused by climate and natural disasters will be reduced substantially with the implementation of the WIBCI system," said the project director while presenting a keynote paper on the subject at the inception workshop on WIBCI, held in the capital few days ago.
The ADB-funded project allows a farmer to claim compensation from his/her insurer when certain climatic trigger points are hit, like when  cyclone or tropical storm in a given area hits a specified magnitude or when rainfall rises above or drops a certain level. No doubt, this kind of cover would give farmers the ability to continue to plan and save for the longer term even if their harvests are suddenly damaged by bad weather, said the ADB. Understandably enough, this being the starter, the initiative is likely to be geared up with support from all stakeholders in the near future.
The project involving Tk 213.421 million is aimed at increasing the resilience of farm households to climate and natural disaster risks through safety nets against income shocks, access to credit and higher investment in agriculture. Around 20 weather stations will be procured and some 12,000 farm families will be enrolled under the project. The stations are expected to be set up in drought-prone Rajshahi, flood-prone Sirajgonj and cyclone-prone Noakhali districts in the next three months. Under this project, some 6,000 farmers, particularly small and marginal ones who are directly dependent on agriculture, will be enrolled for the project and be sensitised through awareness seminars on climate risks and agricultural risk management techniques. The pilot project is expected to provide necessary weather information, data and if necessary, insurance coverage for adverse climate like inadequate or excess rainfall at the time of sowing or harvesting. A detailed demand and feasibility analysis will assess potential crops, weather-related perils specific to the crops.
According to experts, index-based weather insurance is a major institutional innovation that could revolutionise access to formal insurance for millions of small farmers and related people. It has been introduced in pilot or experimental form in many countries. Significant efforts have been made in research to assess its impacts on shock-coping and risk management, and to contribute to improvements in design and implementation. 
Weather index-based insurance products have been tested and applied across Asia and Africa with varying degrees of success, as a mechanism to improve livelihood security by enabling vulnerable populations to transfer risk associated with climate change, extreme weather events and other hazards. In drought-prone Africa and parts of northern India, index-based agro-insurance coverage is being practised for sometime now. But the practice is totally new for our farmers.
In order for the weather-based crop insurance to succeed, the need for  improved weather forecasting cannot be overemphasised. A recently inked $113million project with the World Bank to modernise the country's meteorological and hydrological information system, including weather forecasting, early warning systems, and delivery of weather and climate services may serve well to benefit the current pilot project and also encourage crop insurance to flourish in the country. However, as crop insurance is new to the country, a good deal of its success will depend on how farmers are motivated and delivery of services is ensured. The country's agro experts do have a proactive role to play, working closely with meteorologists.