Chitwan, August 29, 2024 – Banana farmers from Chitwan are in Kathmandu this week, expressing their frustration over the prolonged delay in receiving insurance payouts for significant losses suffered during a storm in May.
On May 31, severe winds ravaged banana crops across a vast area in eastern Chitwan, causing damages estimated at Rs150 million. Madhav Ghimire, president of the Chitwan Banana Producers Association, described this incident as the most catastrophic loss the farmers have ever faced. “Insurance officials visited the impacted areas, conducted assessments, and submitted their reports, yet months have passed without any financial relief,” Ghimire lamented.
Despite having insured their crops, farmers are now facing a dilemma, as insurance companies are reluctant to accept new premiums for the upcoming harvest. Bishnu Hari Panta, a former president of the association, stated, “We are here to address these pressing issues and have already met with the agriculture minister and the secretary.” He voiced concerns that uncertainty surrounding insurance claims is jeopardizing farmers’ ability to cultivate their crops effectively.
Experts are linking the increasing frequency and severity of storms to climate change, which has exacerbated various climate-related disasters in Nepal, including droughts and floods. The National Climate Change Survey 2022 revealed that the cumulative economic losses in both on-farm and off-farm sectors over the past five years reached Rs415.44 billion. Among these disasters, drought was cited as the most detrimental, impacting 65.4% of households, followed closely by insect-related issues and storms.
Farmers are critical of the government’s handling of insurance policies. On Monday, they convened with representatives from various insurance companies and the Nepal Insurance Authority at the agriculture minister’s residence. Ghannath Mahato, a former association president, expressed his frustration over the reluctance of insurers to renew his coverage despite minimal damage to his farm during the storm. He noted that, due to unresolved claims, he is apprehensive about potential future losses from subsequent storms.
Since March 14, non-life insurance companies have halted claims settlements for insured agricultural products, citing the government’s failure to provide premium subsidies. Mahato, concerned about the increasing frequency of storms in Chitwan, stated, “This is peak farming season, yet we find ourselves at the agriculture minister’s office voicing our grievances.”
In Chitwan, banana plantations span approximately 3,500 bighas (2,370 hectares), predominantly located in the eastern regions. Ghimire indicated that insurance payouts often come significantly delayed, recalling that the last claim took an agonizing 13 months to process.
Crop insurance was introduced in Nepal in 2013 with considerable enthusiasm, backed by government initiatives aimed at providing financial security to farmers. Initially, farmers were offered a 50% subsidy on their premiums, which later increased to 75% and, as of 2021, was set at 80%. However, the rapid increase in claims—from 802 in the first year to 36,000 last year—has strained the system.
Insurance companies have attributed the ongoing claims delay to the government’s failure to release the necessary premium funds. “The agriculture minister has promised to expedite the resolution of these issues,” Panta reported.
The premium for insuring banana crops is fixed at Rs275 per tree, with payouts covering up to 90% of losses incurred. For instance, insuring a biga of Malbhog bananas costs Rs30,339, with farmers contributing Rs6,070 and the government covering the remaining Rs24,269.
As farmers await the much-needed support, the urgency of their plight grows, emphasizing the need for timely government intervention in protecting their livelihoods.
