The Securities and Exchange Commission of Pakistan (SECP) has proposed the establishment of an agricultural insurance pool for farmers and herders, reports WealthPK. A report by the commission on crop and livestock insurance suggests that this insurance pool can initiate its operations by introducing standardized contracts to address specific risks such as floods or inadequate rainfall. This approach aims to streamline processes and reduce overall costs for all stakeholders. The report also recommends that the government improve the current insurance system by turning it into a broader co-insurance pool.

The report also talks about lack of national insurance for crops and animals that helps farmers who don’t take loans. Only a small percentage of farmers have insurance, and many face problems like not being able to afford it or not knowing enough about it. This makes it hard for them to deal with disasters that can harm their crops or animals. Talking to WealthPK, Principal Scientific Officer at the National Agricultural Research Centre (NARC) Bilal Iqbal said, “Agricultural insurance is crucial and can dramatically change the situation for farmers, but unfortunately in Pakistan, it has not got significant attention. Its primary cause is that Pakistan's agriculture sector is riskier because of many factors.

“In terms of agricultural insurance, Pakistan lags considerably behind the rest of the world. Many farmers in developed countries use agricultural insurance as a form of financial protection.” “For the success of any agro-insurance program, it is essential to connect the farmers with banks. It would be a crucial step for farmers who borrow money from banks,” he said. He added, “Farmers face numerous challenges, including unpredictable weather patterns, crop diseases, and price fluctuations. These uncertainties can have devastating consequences on their livelihoods and stability of the agricultural industry as a whole. To mitigate these risks and support farmers, establishment of an insurance pool for agriculture will prove a game-changer.”

“It will provide our farmers with faster relief when their crops are damaged by climate-related disasters like floods and storms. The impact of climate change, including heat waves, erratic rainfall, and flooding, has had a devastating effect on Pakistan's agriculture,” he said. The scientific officer said, “Another reason why insurance is crucial in Pakistan is that, in addition to the damage brought on by the natural disasters, farmers also have to deal with canal irrigation and depletion of underground water. These problems damage crops, disrupting the farmers' revenues. The farmers then struggle to pay back their loans because of low incomes. “As we strive for a more sustainable and food-secure future, agro-insurance will be a crucial step toward building a resilient and thriving agricultural sector,” he added.

Credit: Independent News Pakistan (INP)