Dhaka, Bangladesh (BBN)– Bangladesh government, Asian Development Bank (ADB) and stakeholders at a seminar on Sunday discussed financial protection options to mitigate risks in the country’s agricultural sector.

The two-day international seminar on “Financial Protection towards Agriculture Risk Mitigation in Bangladesh” was opened at a hotel in Dhaka today.

Safiqur Rahman Patwari, Chairman, Insurance Development and Regulatory Authority (IDRA) was the chief guest and Manmohan Parkash, ADB Country Director for Bangladesh was the guest of honor.

Arijit Chowdhury, Additional Secretary, Financial Institutions Division; and Gokul Chand Das, Member, IDRA were special guests.

Experts from Bangladesh, India, Spain, and Turkey also joined the working sessions discussing technical aspects and tools on safety nets and risks mitigation in agriculture.

The event is sponsored by an ADB technical assistance project titled “weather index-based crop insurance” financed by the Japan Fund for Poverty Reduction (JFPR).

The project supported the government to pilot weather index-based crop insurance in three districts – drought-prone Rajshahi, flood-prone Sirajgonj and cyclone-prone Noakhali.

The seminar discussed managing risks for financing agriculture value chains, global approaches to weather risk mitigation, lessons from weather-index based crop insurance pilot, options for financial protection for enhanced resilience, and the way forward.

Senior government officials, donors, and local and international experts who attended the event reiterated their commitment to continue supporting efforts to strengthen the financial resilience of the agriculture sector, mainly the smallholder farmers.

The seminar discussed instruments and mechanisms for enhancing the financial resilience of the agriculture sector to respond to disasters. International experts from India, Spain, and Turkey presented different models and products to provide timely and adequate compensation.

Participants also discussed broader financial strategies to ensure the selection and implementation of the most cost-effective instruments for different layers of risk.

The seminar noted the government’s commitment in identifying efficient mechanisms to enhance financial management of disaster risk while stressing the importance of knowledge sharing and capacity development.

Chairman IDRA Safiqur Rahman Patwari said that the regulator is supportive of the government’s initiatives and crafting an enabling environment for the development of this vital segment of the insurance business.

“ADB is encouraged by the success of the weather index-based crop insurance pilots and the potential for scale-up, and we would like to work with the Government of Bangladesh, development partners, and financial institutions to develop robust financing mechanisms and instruments for agriculture risk protection,” ADB Country Director Manmohan Parkash.

The special guest, Additional Secretary Arijit Chowdhury highlighted the vulnerability of the farmers to natural hazards and climate change risks, and the readiness of the Government of Bangladesh to support the development of risk sharing and risk transfer instruments for agricultural risk protection, beyond production risks along the entire value chain.

Managing Director of Sadharan Bima Corporation (SBC) Syed Shahriyar Ahsan outlined the achievements and the positive awareness amongst farmers regarding crop insurance which will help in scaling up the credit flow to the agriculture sector.

He offered SBC’s support as a reinsurer for expanding the market.

The agriculture sector, which comprises about 14 percent of Bangladesh’s total GDP, plays a significant role in the country’s economy through employment generation, poverty alleviation, and providing food security.

The sector employs over 42 percent of the labor force, both directly and indirectly. However, extreme weather events brought about by climate change, and the intensification of natural hazards and disasters pose threats to the sustainability of the sector.

Sadharan Bima Corporation started piloting the weather-index-based crop insurance products in March 2014, and the project ends in June 2018. Parametric weather indices were developed using weather data generated by the Bangladesh Meteorological Department.

These indices helped determine the trigger points for payout, for example, when the rainfall rises above or drops certain levels. Twenty automatic weather stations were installed using project funds to ensure timely claims payouts when an event is triggered.

In the final round of piloting, a tie-up with a mobile-banking provider has enabled collection of insurance premium and claims settlements in case of a loss. The use of mobile banking will make transactions efficient and transparent.

A total of 9,096 small farmers’ households were enrolled against a target of 6,000. Against a total premium volume of $0.63 million during the tenure of the project, SBC had paid claims amounting to $0.66 million as of April 2018.