The Hindu Business Line : SLBC for reduced poultry premium

SLBC recommendations
The SLBC has recommended that insurance companies should arrive at the threshold crop yield by taking into account the best five years yields in the last one decade.

Hyderabad , March 20

In a bid to bailout farmers in Andhra Pradesh from prohibitively expensive crop insurance premium, the State Level Bankers Committee (SLBC) has urged the State Government to take up the matter with the insurance companies and significantly reduce the insurance premium.

According to SLBC, the premium rate of 8.85 per cent is on the higher side for rain-fed cotton crop, while the interest rate for crop loan is 8-12 per cent. The interest rate and insurance premium together will be around 20 per cent burden on farmer. The farmer can avoid the interest burden to some extent by repaying immediately after harvesting the crops, but he cannot avoid insurance premium. Thus, if a farmer who avails himself of a loan of Rs 50,000 pays around Rs 3,000 as interest (at 12 per cent per annum for six months), he pays Rs 4,925 as insurance premium.

Some farmers are not willing to avail themselves of the loans due to high insurance premium.

Further, high insurance premiums and renewals were resulting in non-payment of loans on a regular basis.

The SLBC has also recommended that insurance companies should arrive at the threshold crop yield by taking into account the best five years yields in the last one decade as against the current practice of arriving at threshold yield from the average yield for the last five years. In a bid to bailout poultry farmers facing the bird flu crisis , the bankers committee made a similar recommendation of significantly reducing the insurance premium for the poultry sector.

According to SLBC, poultry farmers in the State were losing over Rs 5 crore per day and do not have adequate funds to feed the existing birds.

The SLBC has endorsed the request of poultry farmers' associations to postpone term loan instalments for six months and sanction short-term loans for two months requirement of working capital to be repayable in 12 months.

The SLBC has also urged insurance companies to review their stand on insuring shrimp farming units since the absence of insurance coverage was hindering lending by banks.

More Stories on : Insurance | General Insurance | Andhra Pradesh

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