MoAD preparing to remove ceiling on insurance subsidy

KATHMANDU, March 15:

The Ministry of Agricultural Development (MoAD) is preparing to lift the ceiling for subsidy on insurance premium for farmers insuring their crop and livestock.

The government took the decision after realizing that the policy of providing subsidy only for agribusiness worth below Rs 10 million was affecting its move to commercialize farming. Officials of MoAD have held several rounds of meeting to study the impact of removal subsidy ceiling. They have also held discussions with the finance ministry officials. Though officials have agreed in principle to remove the ceiling, they are yet to decide on subsidy in proportion to the insured amount.

MoAD is still to receive the go-ahead of the finance ministry to remove the ceiling.

Officials of the finance ministry have suggested to MoAD to provide 25 percent subsidy for crops and livestock worth Rs 10 million to Rs 30 million and 10 percent subsidy for agribusinesses of Rs 30 million to Rs 50 million. Finance ministry has advised MoAD not to provide any subsidy at all to agribusiness worth more than Rs 50 million.

However, MoAD has expressed disagreement over the suggestions given by the finance ministry. Vijoy K Mallick, joint secretary at MoAD, said the suggestions were not practical and that it would discourage big investment in agriculture sector. “Therefore we have proposed new subsidy rates and forwarded it to the finance ministry for approval,” he added.

MoAD sent the new subsidy rates to the finance ministry on Thursday. It has proposed to the finance ministry to provide 50 percent subsidy on agribusinesses worth up to Rs 50 million. It has proposed different subsidy on insurance premium for agribusiness with insured amount between Rs 50 million to Rs 10 million and above Rs 10 million.

“There are several agribusinesses like cow farms and fruit orchards whose investment is beyond Rs 10 million. The existing subsidy program cannot protect that investment,” Mallick said.

A Rupandehi-based ostrich farm had bought insurance policy worth Rs 280 million. But it couldn´t get any subsidy from the government because of the ceiling on subsidy.
Meanwhile, MoAD has begun collecting information of commercial farming of crops and livestock from all 75 districts in a bid to address policy issues in farm commercialization.

The ministry recently issued circulars to its line agencies, asking them to compulsorily insure agribusinesses running under grants of government agencies or donors. It has also asked the Social Welfare Council to make only those agribusinesses, who have bought insurance policy, eligible for financial support or grant from non-governmental organizations (NGOs) and international non-governmental organizations (INGOs).

Source: Republica