Securing Sri Lanka's Farming Future: Why Agriculture Insurance is Key to Avoiding Food Shortages

Mr. Indra Rupasingha, a senior value chain consultant at Vivonta Green Tech, has collaborated with the World Bank on intercropping spice crops, coffee, and tea. His expertise, enriched by Scandinavian and European agricultural systems, includes environment-controlled agriculture, organic production, and animal husbandry. His extensive experience is further demonstrated by his roles as Director at Sri Lanka State Plantations Corporation, General Manager at John Keels Plantations/Elkaduwa Plantations, and Managing Director at Lipakelle Plantation.

Executive Summary:

Sri Lanka’s agricultural sector, the backbone of the nation’s economy and food supply, faces unprecedented risks due to climate change and unpredictable policy shifts, such as the abrupt push for organic agriculture, which led to a national crisis. As the 2024 presidential election approaches, it’s imperative that candidates prioritize the creation of a robust, transparent, and effective agricultural insurance system, learning from successful models like those in Canada, New Zealand, the United States, and France. These nations have demonstrated how a well-implemented insurance system can not only protect farmers but also secure the country’s food security. Sri Lanka must follow suit to shield its farmers from disaster and encourage them to continue cultivating for profit.

Sri Lanka’s Agricultural Insurance: A Critical Need for Food Security

In recent years, Sri Lanka’s agricultural sector has suffered heavily from natural disasters and ill-advised policy changes. The overnight shift to organic farming, which lacked proper planning and execution, left farmers in disarray and the nation teetering on the edge of a food shortage. While Sri Lanka has the National Insurance Regulation Authority, it has yet to truly serve the needs of farmers, burdening them with convoluted insurance agreements and inadequate protection. With 29 insurance companies operating in Sri Lanka, only one openly shares its Net Promoter Score (NPS), leaving the rest to operate under a shroud of secrecy. This lack of transparency has eroded trust and failed to provide the safety net that farmers desperately need.

But what if Sri Lanka could learn from other nations that have successfully mitigated agricultural risks? Countries like Canada, New Zealand, the United States, and France have all developed effective agricultural insurance programs that offer timely payouts, use advanced technology, and provide farmers with peace of mind. Implementing such a system in Sri Lanka could help the nation avoid food shortages and promote continuous, profitable cultivation.

Learning from Canada, New Zealand, the US, and France

In Canada, the AgriInsurance system is a federal-provincial partnership that leverages satellite imagery, AI-based risk assessments, and real-time data monitoring to ensure fast and accurate crop loss evaluations. Farmers in Canada are particularly satisfied with the program because it is transparent, affordable, and provides swift compensation, allowing them to recover quickly from natural disasters and resume cultivation.

Similarly, New Zealand’s FMG Rural Insurance focuses on customer-centric services, allowing farmers to use mobile apps to report losses and track claims. This ensures minimal delays in payments and fosters trust between insurers and farmers. In the United States, the USDA’s Risk Management Agency (RMA) works with private insurance companies under federal oversight, providing quick and standardized claim processes. Their use of satellite technology and cloud-based systems ensures accurate monitoring and dispute resolution.

In France, Groupama Agricultural Insurance integrates digital platforms that allow farmers to monitor real-time weather data and crop growth. With highly automated claim processes, French farmers enjoy efficient compensation, minimal delays, and high satisfaction.

Justifying the Need for Agricultural Insurance in Sri Lanka

Sri Lanka’s agriculture sector is critical to the country’s food supply and economic stability. However, the risks associated with climate change, fluctuating market prices, and ad-hoc policy changes threaten to destabilize this vital industry. Crop insurance can provide a safety net, allowing farmers to continue cultivation despite the odds.

One of the key barriers to implementing an effective insurance system in Sri Lanka is the bureaucratic red tape, leading to delayed claims and confusion over policy conditions. Farmers are left feeling unsupported, often burdened with agreements they cannot understand without legal assistance. A simplified, transparent, and technology-driven insurance model—like those seen in developed countries—could remove these barriers, instill confidence in farmers, and promote sustained agricultural output

.In addition to protecting farmers from natural disasters, agricultural insurance can also provide a buffer against policy-related risks. As seen during Sri Lanka’s overnight shift to organic agriculture, farmers were unprepared and left vulnerable to losses. A well-drafted insurance scheme would ensure that, even in times of policy shifts, farmers can rely on compensation and return to farming.

5 Key Recommendations to Make Agriculture Insurance Popular and Effective in Sri Lanka

Introduce a Farmer-Friendly Insurance Policy: Develop a simplified insurance agreement that is easy to understand, without the need for legal expertise. Make the terms and conditions clear, concise, and accessible in local languages to encourage widespread adoption.

Leverage Advanced Technology for Crop Monitoring and Claim Processing: Adopt satellite imagery, AI tools, and mobile apps to monitor crop health and assess losses. These technologies will provide real-time data, ensure accurate assessments, and expedite claim settlements, creating a transparent system.

Implement Government-Backed Reinsurance to Guarantee Payouts: Ensure that the government partners with private insurance companies to back up the claims process. This would help maintain timely payouts, build trust among farmers, and reduce the risk of disputes.

Tailor Insurance Solutions to Local Agricultural Needs: Offer insurance policies that cater to Sri Lanka’s diverse crops and regional differences. Whether it’s paddy fields or tea plantations, the insurance system should be flexible enough to cover various risks specific to each agricultural zone.

Government Subsidies to Make Premiums Affordable: Provide government-subsidized premiums to make agricultural insurance affordable for smallholder farmers, who form the majority of Sri Lanka’s agricultural workforce. This would ensure that all farmers, regardless of size or income, can access insurance coverage.

Conclusion

As the 2024 presidential election draws near, Sri Lanka’s leaders must recognize the importance of agricultural insurance in safeguarding the nation’s food security. By learning from global examples like Canada, New Zealand, the US, and France, Sri Lanka can create an effective, transparent, and technology-driven system that protects farmers and encourages them to continue cultivation in the face of adversity. Implementing these reforms will not only benefit farmers but also ensure the long-term sustainability of the country’s agricultural sector-an outcome vital to Sri Lanka’s future.

The article was developed by Lalin I De Silva, former Senior Planter, Agricultural Advisor / Consultant, Secretary General of Ceylon Planters Society, Editor of Ceylon Planters Society Bulletin and freelance journalist.