Need for Weather-Index Based Crop Insurance and Expansion in Madhesh Province: Nepal Rastra Bank Report
Nepal Rastra Bank's annual economic study report on Madhesh Province highlights increasing climate-related risks in the agricultural sector. Due to irregular rainfall, floods, and droughts reducing crop yields, there is an urgent need to implement weather-index based agriculture insurance and micro-insurance schemes to protect farmers from losses.
Kathmandu. According to the annual economic study report on Madhesh Province recently released by Nepal Rastra Bank, the agricultural sector in the region faces severe vulnerability to weather conditions and climate change. The report highlights that reliance on monsoon rainfall, inadequate irrigation facilities, and unpredictable weather patterns have led to a contraction in both cultivated land area and agricultural output.
In Fiscal Year 2082/83, the total cultivated area covered by food crops, vegetables, and fruits in Madhesh Province saw a significant decline. Unseasonal rain, floods, and droughts driven by climate change have put farmers' investments at risk. Under these circumstances, adopting weather-index based agriculture insurance systems has become essential to mitigate financial losses arising from natural disasters.
The report emphasizes key measures to ensure sustainable agricultural development and risk management:
- Widespread Insurance Coverage: Expanding comprehensive crop and livestock insurance programs to farmers' doorsteps to safeguard commercial production, including cereal crops, vegetables, fruits, livestock, dairy, fish, and goat farming.
- Micro-Insurance Schemes: Launching simple micro-insurance plans with low premium rates to facilitate financial access for smallholder and marginal farmers.
- Index-Based Systems: Implementing modern weather-index based insurance models for objective compensation against environmental risks such as rainfall deficits or flooding.
Mitigating these environmental and production risks in agriculture by providing financial security to farmers remains crucial for promoting agriculture and ensuring food security in Madhesh Province.