Area Yield Index Insurance scheme proposed by PAC leads to heat wave payout

In the Area Yield Index Insurance (AYII) scheme proposed by Pakistan Agricultural Coalition (PAC), if average area yields drop below 70% of the historical yield in an area, then farmers are entitled to insurance payouts. Unlike the government offered Crop Loan Insurance Scheme (CLIS), this type of insurance offers a much wider coverage including triggers for payout due to yield loss attributed to a number of climatic calamities as well as pest/bacterial attacks that CLIS does not cover.

The proof of concept was observed through a successful pilot conducted with wheat farmers in the district of Sheikhupura. Wheat farmers belonging from the Sheikhupura district were affected by the 2022 heat wave and this led to a yield loss in their wheat crop. Due to this unfortunate event, the AYII Scheme was given a boost and the borrower farmers in the district received payouts. The payout ceremony was hosted by TPL at Avari Hotel on Wednesday, 20th July, 2022 and farmers were brought to the event location to be presented with their checks. The total payout was approximately Rs. 0.8 million with 50 participant farmers.  

The stakeholders including Mr. Asif Riaz of Bank of Punjab, Mr. Kashif Rahman of Habib Bank  Limited, Mr. Mohammad Aminuddin of TPL, Ms. Rose Goslinga and Ms. Elise Lee of Pula and  Ms. Daniella Schoch, Mr. Soni Swapnil, Mr. Vikas Mahajan of SCOR offered their input and  encouraging words about the need for crop insurance. After briefly introducing their organizations they explained that while crop insurance is a commercial venture, it is necessary to provide this option to farmers as the entire risk and primary costs, without the major profit, are transferred to  farmers only.  

Speakers noted that it is difficult to introduce a concept that does not exist in the region, but the stakeholders have done a commendable job to bring the Area Yield Insurance Index to Pakistan.  With the varying challenges of today such as climate change, low yield, food security together with PAC’s introduced working model for AYII, a move towards safeguarding growth in the agricultural sector can be made.  

Emphasis was placed on both the provincial and federal Government’s responsibility to subsidize crop insurance and it was especially noted that the private sector has rarely taken such an onus to provide subsidized risk coverage to farmers.