Strengthening Agriculture Insurance in Sri Lanka: Ensuring Food Security Amidst Climate Challenges

Dr. W.G. Somarathne is a highly respected expert in plantations Agri value chain management with over 40 years of experience. He holds a BA in Economics, a Masters in Agricultural Economics from Imperial College, London, and a PhD in Economics from La Trobe University, Melbourne. He has led key projects at institutions like the Hector Kobbekaduwe Agrarian Research and Training Institute and Oxfam Australia, and contributed to World Bank and ADB projects. With nearly 140 research publications, Dr. Somarathne is a prominent figure in agricultural policy, marketing, and sustainable livelihood development, continuing to consult internationally as a freelance development expert.

Executive Summary:

Agriculture insurance in Sri Lanka is crucial for protecting the sector from the impacts of climate change, market fluctuations, and policy decisions. However, the existing insurance schemes are insufficient. This article identifies the weaknesses in the current insurance Act and constitutional framework, proposes necessary amendments, and draws lessons from successful insurance models in tropical countries. It advocates for a robust insurance system to ensure fair compensation for farmers, thereby safeguarding food security and agricultural stability.

Background Details:

Sri Lanka’s agriculture sector, a backbone of its economy, faces growing threats from climate change, erratic market conditions, and policy-related disruptions. Recent challenges, such as the organic and chemical fertilizer policies, market manipulation by commission-driven politicians, and the unregulated use of agrochemicals, highlight the need for a comprehensive agriculture insurance scheme.

Gap Analysis:

Weaknesses in the Current Insurance Act of Sri Lanka:

Limited Coverage: The Act does not comprehensively cover all types of crops, including both annual and perennial varieties. It also lacks provisions for flora, fauna, and biodiversity, which are essential for overall agricultural health.

Inadequate Risk Assessment: The current framework does not account for emerging risks such as climate change impacts or sudden market fluctuations, resulting in insufficient compensation for farmers.

Complex Claim Processes: The claim processes are often cumbersome and lack transparency, leading to delays and dissatisfaction among farmers.

Weaknesses in the Constitutional Framework (20th Amendment):

Insufficient Government Accountability: The current constitutional provisions do not adequately address the government's responsibility for losses resulting from policy decisions or market disruptions.

Lack of Support for Farmers: There are no specific provisions for supporting farmers facing extraordinary losses due to unforeseen circumstances or policy changes.

Lessons from Other Countries:

India's Pradhan Mantri Fasal Bima Yojana (PMFBY): India's PMFBY provides comprehensive crop coverage and compensates farmers for losses due to natural calamities, pests, and diseases. It is funded by both central and state governments, offering substantial protection.

Brazil’s Rural Insurance Program: Brazil’s program covers a wide range of risks, including climatic events and market fluctuations. It supports smallholder farmers and integrates with national disaster relief efforts, ensuring broader coverage.

Thailand's Crop Insurance Scheme: Thailand’s scheme includes both traditional crop insurance and innovative weather index-based insurance, which uses meteorological data to provide payouts based on weather conditions.

Conclusion:

The existing agriculture insurance schemes in Sri Lanka are inadequate to meet the sector's needs amidst climate change and economic instability. Addressing these gaps requires significant legislative and constitutional reforms, as well as adopting best practices from successful international models. Ensuring a robust and farmer-friendly insurance system is essential for maintaining food security and agricultural resilience.

Plan of Action:

Amendments to the Insurance Act:

Expand Coverage: Update the Act to include comprehensive coverage for annual and perennial crops, and incorporate provisions for flora, fauna, and biodiversity protection.

Enhance Risk Assessment: Revise the risk assessment mechanisms to account for climate change and market fluctuations, ensuring adequate compensation for a broader range of risks.

Simplify Claim Processes: Streamline and improve the transparency of claim processes to facilitate quicker and fairer settlements.

Constitutional Amendments (20th Amendment):

Strengthen Government Accountability: Amend provisions to mandate government responsibility for losses caused by policy decisions and support affected farmers.

Introduce Farmer Support Measures: Include specific provisions for supporting farmers during extraordinary losses and integrating insurance schemes with broader disaster relief efforts.

Developed by Lalin I De Silva

Regulatory Measures:

Control Agrochemical Market: Implement stricter regulations and oversight for the agrochemical market to prevent misuse and protect environmental health.

Monitor Policy Impacts: Regularly review and adjust insurance schemes to respond to the impacts of agricultural policies and market conditions.

Implement Best Practices:

Adopt Successful Models: Integrate successful elements from India's PMFBY, Brazil's rural insurance program, and Thailand's crop insurance schemes to enhance the effectiveness of Sri Lanka’s agriculture insurance.

By implementing these recommendations, Sri Lanka can develop a more effective agriculture insurance system that provides fair compensation, supports farmers, and strengthens food security amidst evolving challenges.

Lalin I e Silva, former Senior Planter, Agricultural Advisor / Consultant, Secretary General of the Ceylon Planters Society, Editor of Ceylon Planters Society Bulletin, freelance journalist and Value chain journalist of www.vivonta.lk