$2m Japanese grant for affordable crop insurance

Staff Correspondent, DHAKA, Mar 26: Japan will provide a grant of US$2 million to develop innovative new crop insurance products for giving small-holder farmers of Bangladesh income protection from increasingly severe storms and natural disasters.

Japan will provide the grant through the Japan Fund for Poverty Reduction and the Asian Development Bank (ADB) will administer the fund, and provide technical support for implementing the Weather Index-Based Crop Insurance Project.

The government of Bangladesh is providing in-kind support of $420,000.

The government and the ADB signed an agreement for the grant at a ceremony at Economic Relations Division (ERD) at Sher-e-Banglanagar in the capital on Tuesday, says an ADB press release.

Joint Secretary of ERD Saifuddin Ahmed and Officer-in-Charge and Deputy Country Director of ADB`s Bangladesh Resident Mission Oleg Tonkonojenkov signed the agreement on behalf of their respective sides.

Takayuki Kawakami, First Secretary, Embassy of Japan in Dhaka, among others, also attended the ceremony.

The project will design and pilot crop insurance products over a three-year period in selected districts, with the goal of providing coverage to at least 12,000 farm households.

Bangladesh is one of the most climate-vulnerable countries in the world due to its geography, and there are estimates that agricultural gross domestic product from 2005 to 2050 will be 3.1 percent lower each year due to climate change.

Despite the increasing demand, no crop insurance has been available in Bangladesh recently due to huge financial losses incurred in the traditional agricultural insurance.

Weather index-based crop insurance, which incorporates historical weather and crop production data, is considered to be more cost-effective and efficient than traditional agriculture insurance as it reduces farm-level monitoring and transaction costs. Several countries in Asia, including India, Indonesia,Mongolia, the Philippines, Sri Lanka, and Thailand, have begun piloting or providing these products but this is the first time they are being trialed in Bangladesh.

risingbd/correspondent/mukul