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Crop insurance scenario in Banagladesh
Crop insurance: Crop insurance is a valuable tool to protect against financial risks stemming from crop damage due to unforeseeable hazards – droughts, floods, pests, and so on. The mechanics are quite simple – a farmer can take out an insurance policy on his expected yield of crops, and pay a fixed premium every month to the insurance company. If bad weather results in under production, or destroys the farmer’s crops, the insurance policy pays out, ensuring that the farmer is protected financially and is not left with very little income for the year.Livestock insurance mainly refers to the insurance of horses and cattle. This insurance provide cover against death of animals, like bulls, buffaloes, cows and heifers, arising as a result of accident, disease, parturition or pregnant condition, as the case may be.
Present scenario of crop and livestock in Bangladesh:
Given Bangladesh’s reliance on its agricultural sector, and its propensity for natural disasters, crop insurance schemes can play a crucial role in stabilizing and promoting food production while reducing the likelihood of sudden spikes in rural poverty.
Although the concept of crop insurance has been around for decades, its applications in most developing countries fail due to lack of planning and implantation. Crop insurance was implemented in Bangladesh in 1989 as a government program, but was shut down in 1995 after massive losses. Recently, BRAC has been proactive in its efforts to reintroduce insurance for farmers, and the government is also planning to restart the program.
There are many potential missteps to the success of such programs. Insurance works by spreading individual risks across a large pool of buyers. Because of Bangladesh’s numerous rivers and flat geography, it becomes harder to spread these risks – when flooding occurs, a large segment of the cultivated land would likely be affected, triggering payouts that may cripple the insurance providers. Raising the premiums can prevent this problem, but finding a rate that is not cost-prohibitive to farmers is a matter of detailed analysis and research.
Livestock is a growing sub-sector. Its shared of agricultural GDP represented by livestock in Bangladesh rose from 7.6% in 1974-75 to 12.9% in 1998-99, mainly due to growth of the poultry sub-sector and to a lesser extent the dairy sub-sector, and has been estimated at nearly 16% in 2004 (GOB, 2004). This share is predicted to rise to 19.9% by the year 2020. The growth rate in GDP in 2003 for livestock was the highest of any sub-sector at 4.5%, compared to 3.2% for crops and 2.3% for the fisheries sub-sector. These changes have been promoted by a rapid growth in demand for livestock products due to increases in income, rising population numbers, and urban growth. This phenomenon has been referred to as the Livestock Revolution. The importance of livestock production has increased in Bangladesh as witnessed by the growth of the sub-sector over the last two decades and the contribution to employment in the country. In 2005, the numbers of livestock in Bangladesh are estimated to be 22.6 million cattle, 1.06 million buffalo, 18.4 million goats, 2.38 million sheep, 164.1 million fowls, and 13.5 million ducks (DLS, 2005). Poultry and dairy farming has certain specific advantage over crops, fisheries and forestry. They require less land, least influenced by seasonal change, and the supply of animal origin food is disproportionately low against high demand. The current intake per capita of animal protein in Bangladesh is less than 2g per day, against the FAO recommendation of 28g per day. According to Bangladesh Economic Review (2004), the growth rate in GDP in 2003-2004 for livestock was the highest of any sub-sector at 4.48%, compared to 2.88% for crops and 2.23% for fisheries sub-sector. The high costs of fresh milk production can be attributed to low yield and high feed costs. Average yields are only 2.0 liters per cow per day, although there is some regional variation. Among commercial dairy farmers, average milk production ranges from 3.5 liters per day to a high of 7.2 liters per day.
The branded feed available in Bangladesh is of unknown quality and extremely expensive. Several small animal feed milling plants are operated by the Department of Livestock Services (DLS). Community Livestock and Dairy Development Project (CLDDP) of Grameen Fisheries & Livestock Foundation of Bangladesh, BMPCUL, Non Government Organization (NGOs), and the private sector. Most of these mills have a capacity ranging from 7 to 10 tons per day. Some 4 percent of the milk is processed by the organized sector comprising some 10 dairy processing units. About 15 per cent of the milk produced is consumed by the producer families and 81 per cent goes to the traditional sector. Locally produced liquid milk accounts for 12.8 percent of the formal market. The rest (87.2 percent) consists of imported milk powder. The importance of livestock production has increased in Bangladesh as witnessed by the increase in number of livestock over the last few decades and the contribution to employment in the country .
