Crop insurance that has so far covered only paddy cultivation has been expanded to cover five major food crops too, as announced by the Minister of Finance Ravi Karunanayake in the Budget.
The Government has launched a two-year National Food Production Program to ensure self-sufficient in potatoes, big onions, chilies, maize and soya beans.
Farmers of these crops will also receive crop insurance as in the case of paddy cultivation. Farmers will be paid compensation up to a maximum of Rs. 10,000 per acre for crop damages in times of any natural calamity under this scheme. The agricultural insurance scheme is funded by 1 % levy charged from the profits of all registered Banks, Financial institutions and the Insurance companies since 2013. This 1% levy is credited to National Insurance Trust Fund from which the farmers are paid compensation through Agricultural and Agrarian Insurance Board.
Following the drought that hit at several districts during the 2016/2017 Maha season, farmers whose crops were affected were paid up to Rs. 10,000 per acre last month.
Last year, the government introduced a relief scheme under the name of National Loan Protection Scheme to provide further relief to farmers who could not repay the bank loans due to damages caused to their crops. Accordingly, the National Loan Protection Scheme initiated for the purpose, on behalf of the farmers will pay their banks loan outstanding after having assessed the crop damages. The government has estimated that some of Rs. 500 million will have to be paid to banks in lieu of the loan obtained by the farmers during 2016/2017 Maha season. Even this scheme is supported by the 1 percent levy charged on the Banks and financial institutions.
The National Insurance Trust Fund since the introduction of 1% levy on profits of the banks, financial and insurance institutions has so far received Rs. 5,069.81 million and disbursed Rs. 3,932.34 million as the payment for crop damages and other relief to farmers.
Another Rs. 500 million has been earmarked to be provided to Agricultural and Agrarian Insurance Board to provide relief to farmers under the National Loan Protection Scheme.
- Finance Ministry media release