For 12 years, the government has spent Rs 6.30 billion to subsidise farm insurance premiums. The aim was simple — to protect farmers from losses and encourage them to produce more. Records from the Ministry of Agriculture and Livestock Development show that Rs 5.84 billion went to crop and livestock insurance, while Rs 464.89 million was allocated to other farm insurance categories. During this period, insurers collected Rs 8.31 billion in premiums and paid Rs 7.28 billion in claims. In the last fiscal year alone, non-life insurers sold policies worth Rs 36.84 billion, collected Rs 1.70 billion in premiums, and settled Rs 1.36 billion in claims. The scheme began in January 2013 with much publicity. The Nepal Insurance Authority allowed companies to issue policies covering crops, vegetables, fruits, cereals, poultry, fisheries, cattle and other farm animals. Insurers were required to allocate at least five percent of their policies to microinsurance, including farm insurance. The government initially offered a 50 percent premium subsidy, later raising it to as much as 80 percent. Last year, the Ministry introduced the Guidelines for Providing Subsidies on Crop and Livestock Insurance Premiums 2025. Under these rules, farmers who insure up to Rs 5 million receive an 80 percent subsidy; those insuring between Rs 5 million and Rs 10 million receive 65 percent; and those above Rs 10 million receive 50 percent.
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Why did the state need to spend this money? Because farming in Nepal is a risky occupation. A farmer can lose everything in one bad season. Floods wash away paddy fields. Drought dries up maize. Disease kills poultry and cattle. When this happens, farmers fall into debt. Some migrate for work. Others abandon farming altogether. If too many farmers quit, the country becomes more dependent on food imports — harming both the economy and food security. Agriculture remains the backbone of the economy. It feeds the population and provides jobs to millions. In many villages, farming is not just a business; it is a way of life. If this sector weakens, rural society weakens. That is why farm insurance matters. It offers assurance that if disaster strikes, farmers will not be left alone. But spending money is not enough. The real question is: who benefits? Large commercial farms may find it easier to purchase insurance and claim subsidies. Small farmers in remote areas may not even know such schemes exist. Some struggle with paperwork. Others may not trust insurance companies. If the subsidy primarily benefits larger players, the goal of protecting vulnerable farmers will fail.
There are other concerns. Claim settlement must be timely and fair. If farmers wait too long for compensation, trust in the system erodes. Monitoring is equally important. The government must ensure insurers follow the rules and properly serve assigned districts. Awareness campaigns must reach rural communities in simple and accessible ways. Local governments can help disseminate information and guide farmers through the process. Farm insurance is also linked to broader structural issues. Irrigation, access to quality seeds, storage facilities and fair market prices all affect farm income. Insurance cannot fix poor roads or exploitative middlemen. It is only one part of a larger system. Policymakers must view agriculture as a priority sector, not a secondary concern. The Rs 6.30 billion spent over 12 years demonstrates commitment. Yet commitment must translate into results. The subsidy must reach its intended targets — small and medium farmers who face the highest risks. Agriculture feeds the nation and sustains rural life. If Nepal seeks a stable food supply, reduced imports and a stronger rural economy, it must protect those who till the soil. Used effectively, farm insurance can give farmers the confidence to invest and grow.
