Publication: Bangladesh: Policy Options for Agriculture Insurance
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2018
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2018-12-19
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Agriculture is a key sector in Bangladesh, but it is highly exposed to risks. While agriculture is a source of employment and livelihood for nearly one in two adults in Bangladesh and contributes about 16 percent to gross domestic product (GDP), it is highly exposed to natural hazards. In the past, the government of Bangladesh and development partners have provided substantial support to farmers in the aftermath of large disasters, but this approach has disadvantages in that support is not guaranteed to farmers and may be slow. Agricultural insurance offers the government a planned, fast, ex ante alternative to ad hoc disaster response, one that: (1) reduces the ex post fiscal burden on the government, (2) improves farmers’ resilience to shocks, and (3) supports the expansion of agricultural credit. International experience shows that government can play a variety of roles to support the responsible scale-up of agriculture insurance. The ministry of livestock and fisheries, and other key public and private sector stakeholders, the World Bank Group team has identified four potential types of agricultural insurance to offer in Bangladesh, all of which will require implementation through a partnership between the public and private sectors. The four types are dairy cattle insurance, aquaculture insurance, crop insurance, and fully subsidized agricultural insurance for the most vulnerable.
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“World Bank Group. 2018. Bangladesh: Policy Options for Agriculture Insurance. © World Bank. http://hdl.handle.net/10986/31044 License: CC BY 3.0 IGO.”
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Publication Bangladesh(World Bank, Washington, DC, 2018-12-12)Agriculture is a key sector in Bangladesh, but it is highly exposed to risks. While agriculture is a source of employment and livelihood for nearly one in two adults in Bangladesh and contributes about 16 percent to GDP, it is highly exposed to natural hazards. Indeed, Bangladesh is commonly ranked as one of the most vulnerable countries in the world to natural disasters with agriculture heavily exposed to floods, cyclones, and drought. In 2007, for instance, Cyclone Sidr destroyed 0.69 million hectares of cultivated crop lands and killed over 460,000 head of livestock and poultry. In the past, the government of Bangladesh and development partners have provided substantial support to farmers in the aftermath of large disasters, but this approach has disadvantages in that support is not guaranteed to farmers and may be slow. In the aftermath of Cyclone Sidr, recovery and reconstruction needs were estimated at USD 1.3 billion, or 28 percent of government expenditures. In spite of efforts by the government of Bangladesh, the gap between available funding and needs is often large and can reach more than USD 1.5 billion in bad years (Air Worldwide and ADPC 2014). Bangladesh often relies on international assistance, as over the past ten years, only 33 percent of disaster-related expenses has been met by domestic resources. In addition, disaster relief transfers often take substantial time to reach beneficiaries and require to divert resources away from long term development projects. If the Government of Bangladesh decided to go ahead with support for agriculture insurance, high-level buy-in from a broad range of stakeholders will be necessary, as will partnerships with the private sector. Government may consider: strengthening the overall legal, regulatory, and supervisory insurance environment; developing a centralized database of data for agricultural insurance purposes; provision of financial support to the program, particularly in the early stages of the program; and establishing a dedicated technical team within government with responsibility for implementation and for providing input to policy. One option for consideration would be for some or all of these activities to be carried out through a project with technical support and/or financial assistance of a development partner with adequate expertise in this field, such as the World Bank Group.Publication Bangladesh(World Bank, Washington, DC, 2018)Agriculture is key in Bangladesh but highly exposed to risks.The Government provides significant support to agriculture, but currently provides limited support to the development of agriculture insurance.While the Government and external donors spend large amounts of money in the aftermath of disasters – average annual costs of disasters are USD 300 million - the funding gap is still high and can reach more than USD 1.5 billion in bad years.In spite of Government’s efforts, credit to agriculture is still constrained and represents 3 percent of total lending.If agriculture insurance programs were to be developed in Bangladesh, the overall legal, regulatory and supervisory insurance environment would require strengthening.Based on this preliminary assessment and discussions with key stakeholders, the WBG will prepare a technical report and policy briefing for Bangladesh Ministry of Finance’s Bank and Financial Institutions Division (BFID) on four potential types of agricultural insurance programs which have been identified through this situational analysis as priority solutions for further investigation. The four priority areas identified for further investigation are: (1) Livestock insurance for commercial dairy farmers and poultry farmers; (2) Insurance cover for shrimp producers and artisanal fishermen; (3) Crop insurance linked to credit for small and marginal cereal farmers; and (4) Fully subsidized flood-index insurance for the most vulnerable rural households. The diagnostic reports will also analyze potential institutional frameworks that could be considered for agricultural insurance in Bangladesh, paying specific attention to the potential roles for the Government and insurers.Publication Seasonal Hunger and Public Policies : Evidence from Northwest Bangladesh(Washington, DC: World Bank, 2012)Seasonal hunger induced by agricultural seasonality is often a characteristic feature of rural poverty. The evidence of seasonal distress in many agrarian societies can be found in the narratives of economic historians. 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Chapter three brings Bangladesh's reality to the fore regarding seasonal poverty and food insecurity and the vulnerability of the northwest region. Chapter four analyzes the vulnerability of households to seasonal hunger, their coping strategies, and the extent to which income seasonality affects seasonal poverty and food deprivation. Chapter five reports some findings for both the Rangpur region and the country as a whole regarding the effects of policies and programs on poverty and food deprivation. The findings reported in the next three chapters are mainly related to the Rangpur region only. Chapter six examines the issue of seasonal migration in the context of mitigating seasonal deprivation. In chapter seven, the impact of the social safety-net programs is tested, whereas the effectiveness of microfinance is assessed in chapter eight. The concluding chapter, chapter nine, looks at the policy implications while also pointing to some emerging challenges.Publication Guyana : Agricultural Insurance Component Pre-feasibility Study Report(Washington, DC, 2010-05)The objective of the Agricultural Insurance pre-feasibility study is to identify the institutional, operational, technical and financial challenges for the development of agricultural risk transfer solutions and insurance for rice, fruit and vegetables, livestock, and the aquaculture sector in Guyana. The specific objectives of the study include: (i) to identify the production systems, constraints and risks faced by farmers in Guyana; (ii) to assess the institutional, operational and financial capacity in Guyana to manage an agricultural insurance scheme for the selected activities; (iii) to evaluate the availability of information and collect technical data and information needed for the development of an agricultural insurance scheme for the selected activities; (iv) to assess the potential interest of the possible stakeholders that might get involved in the development of an agricultural insurance scheme in Guyana. This report draws heavily on international experience. International experience on agricultural insurance is vast, as it is currently being implemented in more than 100 countries around the world. This study benefits from this experience, which has been tailored to the local economic and social context of Guyana.Publication Niger : Food Security and Safety Nets(World Bank, Washington, DC, 2009-02)This study aims to assist the Government of Niger in developing a multi-sectoral approach to reducing the population s vulnerability to food insecurity. The study reviews food security policies and programs in Niger, and provides an action plan for strengthening the existing system and developing an effective safety net strategy. The study finds that targeting of food aid has been either weak with significant leakages. Moreover, although the need to support poor and food insecure households is substantial, safety nets are small, receive limited funding, and are designed for emergency food crises. The study recommends to improve the efficiency and scope of safety net programs in Niger and to promote effective strategies to improve food availability and the emergency response systems.
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