Application of Takaful in Addressing the Green Agriculture Concept in Pakistan

Abstract

The agriculture sector is considered to be the backbone of any economy. Unlike other developed or Muslim countries, conventional banks, Islamic banks, microfinance institutions, and the government are not providing suitable insurance facilities to the sector in Pakistan. This is the main reason farmers are poor and the agriculture sector is feeble.  This study aims to provide a suitable Takaful framework which helps to improve the green (or organic) agriculture concept in Pakistan and is ultimately useful to preserve the environment and support the poor farmer. The current study uses the qualitative research approach and concludes the result based on previous empirical studies and semi-structured interviews. The interviews were conducted with 10 Pakpattan and Vehari farmers in Punjab province, Pakistan who are cultivating minimum 5 acre crops. The study findings concluded that farmers are interested in availing of the Takaful facility and agree to cultivate an organic method. The farmers will be happy if the Shariah-compliant insurance (Takaful) framework using the Mudarabah model is offered in the market. However, there are some challenges such as the machinery required to make organic fertilizer, cheap water, and availability of organic fertilizers and the need for educational programs. The first limitation of the study was that interviews were conducted only in two districts of the Punjab region. This study is fruitful for Takaful companies to enter this kind of project. This study will help academicians and scholars for further research and will be beneficial for the government and policymakers to develop more agriculture strategies.