The insurance scheme will cost the government Nu 927.83 million over the next four years

YK Poudel

The government has revived plans to introduce the National Crop and Livestock Insurance Scheme in a bid to protect farmers from the twin threats of climate change and wildlife depredation.

The insurance scheme, which will cost the government about Nu927.83 million over the next four years, will provide a safety net to farmers suffering from crop and livestock losses.

Minister of Agriculture and Livestock Younten Phuntsho presented the proposal to the National Assembly on November 18, outlining the revised program, which is expected to be launched next year.

The initiative follows a resolution passed during the 1st session of the 4th Legislature, which called for the creation of a crop and livestock damage compensation trust fund.

The Minister of Agriculture and Livestock acknowledged the challenges faced in previous attempts to develop a compensation mechanism, including the failure of efforts in 2017 to create an endowment fund and in 2021 to implement a insurance plan.

During the discussions, some MPs expressed concerns about the affordability of insurance premiums for farmers and suggested the creation of a trust fund as an alternative. Others have called for expanding coverage to include additional crops and upland livestock.

Radhi-Sakteng MP Tashi Tenzin questioned the lack of support from the Finance Ministry in recent years, asking how much of the insurance costs would be covered by the government.

The Minister of Agriculture and Livestock assured the House that the project would strike a balance between government support and farmers’ contributions, with reduced premiums compared to previous proposals.

Under the new plan, crop insurance premiums start at 5.8 percent and livestock insurance at 15 percent in the first year, making the program more affordable for farmers.

Unlike the previous trust fund model, which was at risk of being depleted in the event of large-scale disasters, the ministry prioritized an insurance-based model. This provides greater financial stability, predictability and scalability, while also encouraging proactive risk management among farmers.

The total cost of the project over four years will be Nu 927.83 million, with government contributions distributed as follows: Nu 331.37 million in the first year, Nu 265.09 million in the second year, 198. 82 million Nu in the third year and 132.55 million Nu in the fourth year.

To ensure affordability, the ministry proposed a pilot program with a 50 percent government subsidy on premiums. This subsidy will be adjusted according to the financial capacity of the government and farmers, creating a more sustainable financial model.

The ministry worked closely with the Ministry of Finance and insurance companies to refine the proposal, incorporating technical comments and cost estimates for decision-making.

Although an endowment fund for compensation was approved by Cabinet in 2017, it could not be implemented due to unforeseen difficulties. The renewed focus on an insurance model is seen as a more sustainable and equitable solution for the farming community.

The Minister of Agriculture and Livestock expressed confidence that the revised program would be implemented soon, providing farmers with protection against natural disasters, climate change impacts and damage to wildlife.

“This initiative, which highlights the government’s commitment to supporting farming communities, is seen as a crucial step towards achieving self-sufficiency and strengthening rural livelihoods,” he said.

The National Assembly backed the proposal, with 29 out of 40 MPs voting in favor of the insurance model rather than the trust fund option. The House asked the minister to submit a follow-up report during the summer session.