Paddy cultivation insurance scheme in Sri Lanka; its implementation and farmer’s contribution. (Based on 4 selected districts)

Abstract

The agricultural insurance scheme which aimed at the security of investments and economic stability of the farmer is an important risk management tool. The agricultural insurance scheme has insured 40% of the total of the paddy fields in 1977/1978, however, in 2004/2005, it reveals a 1% decrease. In the Maha season 2004/2005, only 2% of the paddy cultivation lands were insured. Agricultural insurance is not implemented with the request of the farmers, and the voluntary participation with this regard is at a very low level. The reasons are the insufficient compensation for damages, the delay in receiving compensation, lack of transparency in estimating damages and low estimations. 99% of the farmers involved in the insurance scheme have entered it with the purpose of obtaining cultivation loans. 50% lacks awareness about cultivation insurance. However, when comparing with the government sector, the private sector is far more effective. However, it is revealed that the main objectives such as investment security and economic stability, are not achieved through the insurance scheme. For a successful insurance for cultivation, observation, quick estimation of damages, quick compensation, could be implemented, and the power of the authorities can be divided. Trained officers should be sent to estimate the damages. A successful service should be available to make the farmers aware of the insurance and benefits. When obtaining loans from government banks, insurance for cultivation should be made compulsory. There should be a strong base without political interference.