Agricultural and Agrarian Insurance Board No. 117, Subhadrarama Road, Gangodawila Nugegoda

Transcription

1 Annual Report 2011 Agricultural and Agrarian Insurance Board No. 117, Subhadrarama Road, Gangodawila Nugegoda 1

2 Contents Notice to the Hon. Minister about the Report- 03 Vision and Mission of the Institution- 04 Board of Directors- 05 Organizational Structure of the Institution- 06 Foreword- 07 Review of the activities of the Board in 2011 Operations Division- 09 Insurance Division- 13 Agricultural Insurance Activities and Livestock Insurance Activities Farmers Pension Division- 17 Farmers Pension & Social Security Benefits Scheme and Fishermen s Pension & Social Security Benefits Scheme Administration and Human Resources Division- 26 Internal Audit Division- 31 Accounts Finance Division- 34 Consolidated Financial Statements for all Schemes- 39 Agricultural Insurance Scheme- 42 Farmers Pension and Social Security Benefit Scheme- 64 Fishermen s Pension & Social Security Benefits Scheme- 78 Auditor General s Report Agricultural Insurance Scheme- 92 Farmers Pension and Social Security Benefit Scheme- 102 Fishermen s Pension & Social Security Benefits Scheme- 112 Answers to Auditor General s Reports Agricultural Insurance Scheme- 122 Farmers Pension and Social Security Benefit Scheme- 133 Fishermen s Pension & Social Security Benefits Scheme

3 117-ස භද ර rර මrප රrර ම,ග ගග ඩව ල,න ග ගග ඩ 117-Subadrarama road,gangodawila 3/1/ /12/20 The Secretary, Ministry of Finance and Planning, Secretariat, Colombo-01. Annual Report I am submitting herewith the Annual Report on the working of the administrative, operational, and financial activities of the Board which incorporates all its activities during the year Yours faithfully, P.A. Abesekara Chairman Agricultural and Agrarian Insurance Board 3 Back

4 Agricultural and Agrarian Insurance Board Vision To be the ideal Agricultural Insurance Institute in South Asia by being the foremost protector in local agriculture Mission To provide an internationally recognized excellent service through collective efforts and coordination with the relevant institutions for the provision of Agricultural Insurance and benefits 4 Back

5 Board of Directors Mrs Sumana Ariyadasa, Attorney at law Chairperson 2. Ravindra Hewawitharana Member Commissioner General of Agrarian Development Department of Agrarian Development Colombo Mr. Shantha Bandara Member Additional Secretary Ministry of Fisheries and Aquatic Resources New Secretariat Maligawatta Colombo Mr. S.C.H.T.Perera Member Director (Social and Economic Planning) Department of Agriculture Peradeniya 5. Dr. W.K.De Silva Member Director (Livestock Resources Development) Ministry of Livestock Resources Development No. 45, St. Michael Road Colombo Mrs Damitha Rathnayake Member Deputy Director Department of Public Enterprises General Treasury Colombo Mrs S.S.G.P. Nivunhella Member Director (Operations and Evaluation) Ministry of Agriculture Govijana Mandiraya Battaramulla 8. Mr. P.C.Tennakoon Member Seewali Niwasa Kobeigane 5 Back

6 Agricultural and Agrarian Insurance Board Organizational Structure 6 Back

7 Foreword The year 2011 can be termed as a year in which the Agricultural and Agrarian Insurance Board, the sole public sector entity offering farmer insurance services in the agricultural sector of Sri Lanka, achieved maximum success in its mission. The Board netted an insurance premium income amounting to Rs 157 million in the year 2011 as a result of the growth in annual income, triggered by the restructuring implemented in 2008 in the Board and it is if significance that 75% of this income which is equivalent to Rs 119 million was generated under crop insurance. This indicates a continuation of the 75% of crop cultivation insurance percentage posted last year. Premier Income Scheme 2006 (Rs Mn) 2007 (Rs Mn) 2008 (Rs Mn) 2009 (Rs Mn) 2010 (Rs Mn) 2011 (Rs Mn) Crop Insurance Livestock Insurance Stores and Agricultural equipment Insurance Suwasetha and Personal Accident Insurance Total Rs Mi lli on Annual premium income Crop Insurance Rs Mi lli on Total premium income LiveStock Insurance Stores and Agricultural eqvipment Insurance Suwasetha and personal accident Insurance Year Year It is also noteworthy that more than 227 million was paid as compensation for the damages caused to crops by severe floods during the Maha Season of 2010/2011 in the leading agricultural districts of the island Anuradhapura, Polonnaruwa, Batticaloa, Ampara and Trincomalee, at the beginning of the year The awarding of compensation to more than 14,000 farmers affected by this natural disaster within a very short period was an important landmark in the history of the Board. The year 2011 thus became the year in which the Agricultural and Agrarian Board posted the highest income and also paid the greatest amount as compensation in its history. 7 Back

8 The record premium income can mainly be attributed to Memoranda of Understanding that the Board entered into with People s Bank and the Bank of Ceylon which were in operation since The awarding of the highest compensation in the history to the farmer community affected by a natural disaster is an event of national importance. The Board was able to win the trust and confidence of both the banking sector as well as farmer community through the expeditious payment of compensation even before the end of the season for farmers who sustained crop damages which enabled the banks to recover the agriculture loans which in turn eased the debt burden of farmers. Since this stirred a greater interest among the financial institutions and the farming community about the need for crop insurance, it can reasonably be assumed that the upward trend in the income of the Board will see further growth. Further, with the ending of the three decade old war that ravaged Northern and Eastern provinces of the country, the Board was able to contribute to the agricultural renaissance taking place in these areas in the midst of a massive development drive. In particular, with the program launched by the state commercial banks to grant loans to cultivate paddy fields lying fallow in the districts of Vavuniya, Kilinochchi, Mulaitivu and Mannar, the Board took action to insure the relevant crops. A further expansion of the crop insurance scheme in these areas can be expected in the year The Board was also able to achieve sizable progress in comparison to the preceding year in Livestock insurance, Stores and Agricultural Equipment Insurance, Suwasetha Health Insurance, Stores and Agricultural Insurance which are among other insurance schemes implemented by the Board apart from the Crop Insurance. The total premia income from this exceeded Rs. 38 million. The tractor insurance scheme implemented in collaboration with the private sector, which has been in operation since 2009 was implemented this year too and action was pursued to draw up plans in tandem with the Ministry of Agrarian Services and Wildlife to implement the proposed wild elephant insurance scheme. The Board expects to put this wild elephant insurance scheme into operation during at the commencement of 2012 and is optimistic that it will offer a lasting solution to the pressing economic and social problems encountered by people living in close proximity to forest areas. The farmers Pension and Social Security Benefit Scheme had reached the zero level by June 2010, leading to a crisis situation and the Board is in the process of drawing up plans jointly with the Ministry of Finance and Planning to find alternative solutions to this problem. Accordingly, attention is focused on making the services of the Board more accessible to the people to suit the timely needs and implement such services more productively and efficiently. Against this backdrop, the Agricultural and Agrarian Insurance Board submits through this report, effectiveness of its performance in the year

9 Operational Division 9 Back

10 Operational Division The Agricultural and Agrarian Insurance Board implemented the following insurance schemes during the year Insurance Schemes Implemented 1. Agricultural Insurance Schemes Paddy Insurance Scheme Maize Insurance Scheme Subsidiary crops insurance Scheme (Green Gram, Ground Nuts, Soya, Undu ) Big Onion Insurance Scheme Sugar Cane Insurance Scheme Export Crops Insurance Scheme Insurance Scheme Plantation Crops (Tea) Insurance Scheme Coconut Insurance Scheme Potatoes Insurance Scheme Flower Cultivation Insurance Scheme Ginger Insurance Scheme Chili Insurance Scheme Vegetable Cultivation Insurance Scheme Fruit Cultivation Insurance Scheme 2. Stores Insurance Scheme 3. Tractors including agricultural implements Insurance Scheme 4. Livestock Insurance Scheme Goats Cattle 5. Accidents Insurance Scheme 6. Suwasetha Insurance Scheme Marketing and Publicity Campaigns As the guardian of the local agriculture, the Agricultural and Agrarian Insurance Board, the sole public sector entity in the field of agricultural insurance, plays a pioneering role with the aim of its upliftment. At the very beginning of the year 2011, a major challenge was thrown at the Board as floods triggered by torrential rains wreaked havoc in the local agriculture and caused heavy losses to agriculturalists. Providing relief to the affected, a sum of Rs. 227,247,000/= was paid as compensation to 13,925 farmers for 32,576 acres of paddy and other crop cultivations damaged as a result of this disaster. This primarily helped them to overcome difficulties such as the inability to pay back bank loans as experienced in the past when crops were damaged and exempted them from that responsibility while strengthening their financial status. 10

11 Having overcome this challenge, the relevant functions were steered during the year for fulfilling the objectives of the Board for the betterment of local agriculture and agriculturalists. These activities were carried out covering the entire country which was divided into two major categories. 1. Main Agricultural zones Special zones where agriculture has expanded itself into export agriculture with well-regulated irrigation management under the mega irrigation schemes transcending the boundaries of traditional agriculture and where the agriculturalist has become an agro-businessman have been targeted for this. A praiseworthy progress has been achieved through crops like paddy and maize from which our institution can earn direct income. In addition, other agricultural crops such as vegetables, supplementary crops, biannual crops and export crops too contributed to the income in a considerable manner. 2. Semi agricultural zones Areas where people are also engaged in agriculture in addition to other industries and where agriculture is not the main livelihood have been utilized for this. The significance here is that agriculture has been partially displaced due to industrialization. Under this arrangement, the following means of marketing methods were utilized to capture the market. I. By promptly inspecting damages sustained In the face of unfortunate situation faced by farmers due to adverse weather conditions experienced during the beginning of the year and by taking prompt measures for the speedy payment of compensation to extricate them from this predicament, the institution was able to win the admiration of the people and other institutions. II. III. IV. By erecting an eye- catching and attractive stall in the premises set aside for out institution at the Deyata Kirula national exhibition held in 2011, an attitudinal change in the people could be brought about many were educated about the services rendered by the Board thus creating a high-regard for the Board among the public. Broadcasting a publicity program about the Board at the radio service of the exhibition. This contributed to create awareness about the activities of the Board among a large number of people. The Board was able to get wide publicity by creating a DVD on the Board titled Arassawa. It was created using both audio and video features to arrest the attention of farmers. V. A special sales promotion mobile visit was carried out in the 15 selected Grama Niladhari divisions in the Gampaha district on VI. Special mobile services were conducted in the Jaffna and Vavuniya districts from and on in the Galle district to solve problems faced by farmers. VII. Sales promotion programs were conducted in several selected districts Manampitiya A special get-together for awareness raising was held on for all bank officials of Weikanda and Aralaganwila. Anuradhapura 11

12 A get-together to create awareness for Agrarian Services Commissioners, Assistant Commissioners and regional officers was held on Kurunegala A get-together to create awareness for Agrarian Services Commissioners, Assistant Commissioners and regional officers was held on Batticaloa A special discussion and a get together with the participation of the Agrarian Development Commissioner and regional officers was held on Ampara An awareness program and a get together with the participation of the Agrarian Services Commissioner and Assistant Commissioner and all Agrarian Development Officers were held on VIII. Functions for awarding compensation coupled with awareness programs were organized in selected districts with the participation of farmers. Accordingly, publicity campaigns were carried out on in the Haambantota District and on in the Matara District. Marketing Communication Strategies 1. Maha Gedarin Govi Gedarata Program was broadcast over City FM Radio Channel. 2. Publicity handbills were distributed in several districts. 12

13 Insurance Division Agricultural Insurance Scheme and Livestock Insurance Scheme 13 Back

14 Insurance Division Measures have been taken to underwrite Insurance schemes implemented by the Agricultural and Agrarian Insurance Board under 03 main categories. 1. Crop cultivation activities 2. Livestock Insurance activities 3. General Insurance activities During the year 2011, while giving priority to crop cultivation activities, more attention was also focused on general insurance. This method was adopted as an alternative strategy to offset high risks associated with agricultural insurance. The year 2011 can be termed as a year where measures were taken to continue with insurance schemes implemented up to the year The Board also introduced several new insurance products to the market during the year. Crop Cultivation Activities Existing crop cultivation activities were maintained as in previous years. Under the restructuring process, launched in 2008, the continuing growth in the premia income was sustained during the year. A record income of Rs million was posted in the year 2011 under the crop cultivation activities. Under crop cultivation insurance cover has been provided to paddy, maize, sugarcane, potatoes, chili, export crops (cinnamon, pepper, cocoa, areca nut, coffee), plantains, vegetables, B-onions, red onions, beetle, perennial crop( mangoes, rambutan, fruits), supplementary crops (green gram, cowpea, black gram, gingelly) coconut, tea plants, cashew plants, greenhouses, ginger, pineapple, papaya and turmeric cultivations and a greater contribution was made to paddy and maize during the year. Livestock Insurance Activities The existing insurance scheme was maintained as it is. Further, livestock insurance was strengthened by launching a group insurance scheme in collaboration with the Ministry of Livestock Development. The income generated from this special project was Rs. 6.5 million and the net annual income earned from this insurance scheme was Rs million. General Insurance Activities Under general insurance, Suiwasetha insurance, accident insurance and stores and equipment insurance were carried out the annual income from them respectively was Rs. 6.95, 7.27 and 7.48 million. Expanding Underwriting Activities 1. Implementing Special Sales Promotion Programs A special sales promotion program was implemented from to under the existing accident insurance. This promotion program helped in further strengthening this insurance scheme and was 14

15 made use of to stabilize the basic fund required for meeting the obligations. A system of incentives too was introduced for the field staff under this special project to motivate them. Accordingly, a record net profit of Rs million was made during the period of the special project. The net annual income earned under the accident insurance scheme was Rs million. 2. Browns Project Well supported by the district offices, the tractor insurance scheme implemented jointly with Browns Company too posted a record profit during the year. A sum of Rs million was received from Browns Company of which Rs 2.2 million was released to the districts as incentives. Accordingly, the net income was Rs million. In addition, the net income earned under the equipment insurance scheme was Rs million. 3. Introduction of new insurance scheme and amendment a. Turmeric Insurance Scheme- An insurance scheme was drawn up for turmeric cultivation. The spadework for the implementation of this as a pilot project in the Amapara district has been done. On the basis of the experience gained through the pilot project, it will be expanded to other districts in b. Wildlife Elephant Damage Insurance Scheme- On the basis of information gathered after a special field study, Wildlife Elephant Risk Insurance Scheme was designed. The approval for this was obtained in the year 2011 and the required background has been prepared for its implementation from c. Paddy Cultivation Insurance- The following amendments were made to the paddy cultivation insurance scheme. i. Amending the cover level - Insurance schemes were updated to amend the insurance money so as to cover the loans granted by banks. ii. Amending the standard harvest Since a fixed standard harvest under the paddy cultivation for the Manampitiya zone was absent, based on information gathered from a number of field researches, measures have been taken to offer a fair value for the fixed standard harvest. d. Red Onion insurance scheme- Since red onion cultivation is widespread in the Northern and Eastern provinces, necessary steps have been taken to have cultivation loans released by banks. Consequently, an insurance cover was designed for this purpose. 4. Updating insurance schemes a. All specimen forms issued to the market were amended to suit the needs of the market. Forms have to be regularly amended to strengthen insurance schemes on the basis of attitudes of people on in agricultural insurance and the experiences gained. b. To further stabilize the insurance of agricultural loans released by state banks, action was taken to have regular discussions with banks to even out the insurance premium. c. At the ministerial level discussions, the need for agricultural insurance was emphatically stated, and measures have been taken to arrest the attention of the senior officials of the ministry for this purpose. 15

16 d. In line with the new SOR, steps have been taken to convert insurance unit into a separate division with a view to expedite underwriting and payment of compensation. Payment of Compensation 1. Adopting a new system for payment of compensation. The process of paying compensation for crop damages was simplified and instead of the manual system of calculating which hitherto existed, a system was developed to calculate compensation using a software and it was employed for calculating crop insurance compensation. As a result of employing this system for the payment of compensation for crop damages caused by sweeping floods during the Maha season of 2010/11, the process could be completed speedily and accurately. The total amount paid as compensation was Rs million for acres of farmers. The compensation paid in the Yala season of 2011 was 8.34 million for 1595 acres of 786 farmers. For the year 2011, the provision released for the payment of agriculture insurance compensation was million. The cop insurance income in the year 2011 was Rs million. 2. Implementing rapid compensation payment programs A program was launched for expeditious payment of compensation relevant to livestock which has been delayed for many years due to negligence of the clients. Several mobile programs were organized for this purpose and compensation was paid instantly. In the year 2011, compensation amounting to Rs 7.5 million was paid and the premia income was Rs million. The general insurance income during the year was Rs 21.7 million and the amount released for compensation was Rs 0.65 million. Significant achievements in the year The year in which the highest income posted in the history was recorded The year in which the highest amount was paid as compensation The AAIB- Paddy Insurance System developed by Mr Indunil Jayasuriya under the guidance of the Assistant Director of the Crop Insurance Division, Mrs. Nirmala De Soyza for the payment of agricultural insurance was presented for a competition organized by the Information Technology Technological Agency (ICTA) and won a merit certificate for its contribution to the state sector and the program was also among the creations selected from Sri Lanka for the Mantham Award Asian region competition held in India. 16

17 Farmers Pension Division Farmers Pension and Social Security Benefit Scheme And Fishermen s Pension and Social Security Benefit Scheme 17 Back

18 Farmers Pension and Social Security Benefit Scheme and Fishermen s Pension and Social Security Benefit Scheme By the end of 2011, the number of farmers receiving pension benefits from this farmers pension and social benefit scheme which was launched in 1987 with the aim of providing protection to the farmer, was The total number of farmers who subscribed to the program was 959,254. By the end o 2010, there was a total of pensioners and in comparison to 2010, the increase in the number of pension beneficiaries was 13%. The amount paid as compensation as pension benefits during the year was Rs. Rs million. Though the Farmers Pension Fund was reduced to zero by July 2010 with the increase in farmer pension beneficiaries, action was taken to pay pension entitlements to the beneficiaries up to December 2011 using other funds provided by the Treasury and the funds maintained by the Board with the approval of the Treasury. Other than the farmers pension contributions, the funds secured through the following sources were used for the payment of pension up to December Provisions received from the Treasury Rs million 2. Other funds maintained by the Board Rs million Accordingly, from the inception of this scheme, a sum of Rs million has been paid for the beneficiaries of the farmers pension scheme. Since rendering this program ineffective owing to the financial crisis in the farmers pension scheme could trigger problems in the economic, social and political fronts while giving rise to legal issues, the Board took measures to take all possible steps to find a sustainable solution on the instructions of the Ministry of Finance and Planning for the continuation of the farmers pension scheme as a feasible scheme. Hence, plans are on the pipeline to design and implement a farmers pension scheme for which all those who have been registered with the existing pension and social benefit scheme are able to subscribe. Payment of Death and Disabled Benefits In 2011 a total sum of Rs. 6,1660,800/= was paid as gratuity to 539 contributors to the Farmers Pension Scheme and a sum of Rs. 239,000 was paid as benefits to 10 contributors who became disabled. Payment of net premium and interest A sum of Rs. 5,994,479/= was paid as premia and relevant interest in 2011 to 615 contributors whose subscription was cancelled owing to the failure to pay premium as required. 18

19 Fishermen s Pension Scheme By the end of 2011, the total number of fishermen registered with the Fishermen s Pension Scheme was 67,553 and a sum of Rs. 2,062,305/= was paid as pension to 1913 pension beneficiaries. These payments were made through 330 post offices. (Annex 1,2,3) Under the Fishermen s Pension Scheme, a sum of Rs. 597,000/= was paid as death gratuity to contributors who died during the year and a sum of Rs. 25,000/= was paid 01 contributor who became disabled. Fishermen s Pension Scheme Payment of Death and Disabled Benefits Division Death Gratuity Disabled Benefits Amount No Amount Paid No Paid Kalutara 1 8, Colombo 2 30, Matara 3 2, , Tangalla 1 6, Negambo 3 31, Mahawewa 2 16, Batticaloa 7 71, Mannar 6 81, Kalmunai 1 15, Jaffna 7 143, Kilinochchi 9 156, Batticaloa (Internal) 1 20, Total , ,

20 20

21 District Total No of Pensioners as at Amount paid to all pensioners Amount paid from 1992 up to now No of Post Offices 1 Colombo ,682, ,716, Gampaha ,201, ,508, Kalutara ,966, ,164, Kandy ,149, ,915, Matale ,488, ,352, Nuwaraeliya ,610, ,230, Galle ,979, ,008, Matara ,000, ,559, Hambantota ,589, ,927, Jaffna/ Kilinochchi ,642, ,661, Mannar 32 33, ,452, Vavuniya , ,976, Mulaitivu 61 64, ,324, Batticaloa , ,454, Ampara ,524, ,388, Trincomalee , ,514, Kurunegala-Maho ,459, ,706, Puttalam ,182, ,465, Anuradhapura/Mahaweli-H ,141, ,981, Polonnaruwa- B G ,171, ,514, Badulla/Mahaweli C ,765, ,174, Monaragala ,882, ,967, Ratnapura/Udawalawa ,305, ,012, Kegalle ,326, ,336, Total ,587, ,684,316,

22 Agricultural and Agrarian Insurance Board Farmers Pension and Social Security Benefit Scheme Payment of Disabled Benefits from January 01 to December District No of deaths Amount paid No of disabled Amount Paid Rs. Total of persons Total (Rs) Colombo Gampaha Kalutara Kandy Matale Nuwraeliya Galle Matara Ampara Trincomalee Puttalam Kurunegala Maho Anuradhapura Polonnaruwa Monaragala Hambantota Ratnapura Udawalawa Mahaweli-H Badulla Kegalla Mahaweli C Mahaweli G Mahaweli B Jaffna Total

23 Fishermen s Pension and Social Security Benefit Scheme Enrollment as at District Fisheries Extension Division Enrollment (Age group wise) ග ට ඨrශය Total Kalutara Galle Mahawewa Matara Colombo Tangalle Puttalam Negambo Batticaloa Trincomalee Mannar Kalmunai Mullaitivu Kilinochchi Jaffna Inland Fisheries Nuwaraeliya Polonnaruwa Ratnapura Monaragala Kurunegala Anuradhapura Matale Kandy Kegalla Badulla Vavuniya Batticaloa- Inland Total

24 Agricultural and Agrarian Insurance Board Farmers Pension and Social Security Benefit Scheme Payment of Net Premium and Interest-2011 District No of total contributors Amount Paid (Rs) Colombo , Gampaha , Kalutara , Kandy , Matale , Nuwaraeliya , Galle , Matara , Ampara 4 29, Trincomalee 3 39, Puttalam , Kurunegala , Maho , Anuradhapura 8 118, Polonnaruwa , Monaragala 5 43, Hambantota , Ratnapura , Mahaweli-H 4 45, Badulla , Kegalle , Mahaweli C 7 78, Total 615 5,994,

25 Fishermen s Pension and Social Security Benefit Scheme Report on the payment of Fishermen s Pension Scheme, December-2011 District Fisheries Extension Division Commenced in May Payment of Pension in May No of Post offices No of contributors Amount No of contributors Amount Kalutara , Galle 71 75, Mahawewa , Matara 1 8, , Colombo 2 4, , Tangalle , Puttalam 1 2, , Negambo 1 8, , Batticaloa , Trincomalee 57 60, Mannar , Kalmunai 1 16, , Mullativu Kilinochchi , Jaffna 1 14, , Inland fisheries Nuwaraeliya , Polonnaruwa 1 1, Ratnapura , Monaragala , Kurunegala , Anuradhapura , Matale , Kandy , Kegalle Badulla , Vavuniya Batticaloe (Inland) 11 11, Total 7 53, ,062,

26 Administration and Human Resources Division 26 Back

27 Administration and Human Resources Division Administration and Human Resources Division Staff As per the provisions of the Management Services Circular No.30, the restructuring process of the staff of the Agricultural and Administrative Insurance Board introduced in 2008, has been in operation under the advice and recommendations of the National Salaries and Cadre Commission and the proposals drawn up by the Board received the approval of the Director General of Management Services on A staff consisting of 421 members too was approved by the Director General of Management Services on The procedure for recruitment and promotion of the approved posts, which is the last phase of this process was formulated and handed over to the National Salaries and Cadre Commission on and it received the approval of the Director General of Management Services on 16 th August Composition of the Staff Employee category Approved Existing No of Vacancies 1 Senior Management Management Junior Management Associated Officer Management Assistant (Technical) Management Assistant (Non-technical) Primary Primary

28 Percentage Staff- Gender Analysis Male -206 Female -124 Total -330 Male Female Age Analysis Age Group No of Percentage Employees % % % % % % Less than % Total % Percentage Less than 30 Analysis as per period of service අව ර ද Years ස වක No of Employees ඛ ය ව ප ර ත ශතය Percentage More than % % % % Less than % Total % Percentage More than 30 Less than 15 28

29 Retirement and vacation of posts in 2011 Male -06 Female -04 Total- -10 Recruitment and Promotions in 2011 External recruitment -- Internal recruitment -66 Promotions -15 Employee Training and Educational Activities In 2011, three employees participated in the Tamil language certificate course conducted by the Sri Lanka Institution of Development Administration. Employee Welfare The programme of supplying morning and evening tea for the staff of the Board continued this year too as was done during the last year. In addition several religious programs were conducted with the participation of employees. Procurement and Transport In 2011 too, the Board continued to purchase, as was done during the past several years, office equipment, capital goods, and stationary to meet the requirements of the Head Office and the District offices. Three vehicles of the Board bearing No 32 Sri 1438, 32 Sri 4947 and were sold through due procurement processes earning a sum of Rs 3,603,100/= and with the approval of the Ministry of Finance three Maruti 800 CC cars were purchased on at a cost of Rs. 3,300,000/=. Office Buildings Following an immediate vacation order, the head office of the Board housed in the CWE Secretariat Building at No. 27 Vauxhall Street, Colombo 02 was shifted to the five storey building located at No. 117, Subhadrarama Road, Gangodawila, Nugegoda. However the Farmers Pension Division was maintained this year too at the CWE building. The Board maintains 26 Regional Offices of which six are housed in buildings owned by the Board. Other offices are housed in rented buildings which belong either to the government or private parties. 29

30 Employee Disciplinary Activities The following is the status with regard to the cases filed by the Board and against the Board in Case No HCT/33/2004 filed in the High Court Trincomalee against Mr. G.L.Shantha Kumra, Field Officer now under interdiction, is still pending. 2. Case No HC/ 2327/06 filed in the high Court against Mr. K.T.Karunananda, Field Officer is pending. 3. Case No. B/520/03 filed against K.A.Sudath Bandara, Clerk and Case No,B/2171/2 filed against K.A.Heenbandara, Field Officer, filed in the Magistrate s Court, Anuradhapura are pending. 4. Case No HC/05/ 2009 filed against Mr. W.B.L. Susil Premaratne, Field Officer, now under interdiction is pending at the High Court, Anuradhapura. 5. Case No B/3012 filed in the Magistrate s Court,Kandy, in respect of the fraud of farmers pension premia at the District Office is pending. 6. The petition of appeal incase No 23/KU/6833/98 filed by Mr. M.I.M.Illiyas, who had been dismissed from service is pending in High Court, Kurunegala. 7. The petition of appeal No. WP/HCCA/CO/312/2003 (f) filed by Bank of Ceylon against the joint order in Case No , and filed by the Board against Bank of Ceylon is pending in the High Court of Civil Appeal. 8. Case NO. 6E/7030/1/1 filed by Miss Maheshi Dilini Buddika in the Embilipitiya Labour Tribunal challenging the termination of her training by the Board is pending. 9. Case No. CA 555/11 filed against the Board by Mrs R.P.Bandumathi in the Civil Appeal Court over sending her on retirement at the age of 57 years is pending. 10. Case No 33/1007/2011 filed by Assistant Director A.L.D.P.S. Ambepitiya in the Labour Tribunal, Maharagama is pending. 11. Case No 6E/7079/11 filed by Assistant Director H.Suranga Vithanage in the Labour Tribunal, Embilipitiya is pending. 30

31 Internal Audit Division 31 Back

32 Internal Audit Division In terms of the Internal Audit Programme for 2011, 88 audit inspections were conducted under the following subjects covering the activities of the divisions if the Board and District Offices. Accordingly, releasing of distress loans for the Administrative Division, recovering the balances of non-recovered loans, placing in the salary step, attendance and obtainment of leave, attendance in district offices, sending leave reports, payment of overtime transport allowance, settlement of electricity bills, payment of advances/ settlements were carried out. In addition running charts, vehicle maintenance (log book), purchasing of assets (LECO), transfer of assets (CWE), procuring capital assets, stores activities, non-using print stocks, repairing of vehicles using capital provisions and legal activities were inspected. Examination of the Loans and Advance account under the inspection of cash books and bank reconciliation statements, Suwasetha insurance premia payments, livestock insurance scheme, capital account, death and disabled compensation payment, agricultural insurance administration account, farmers pension administration account, farmers pension payment account, fishermen s pension payment account, pension and disability payment accounts and medical assistance account was carried out. Farmers pension administration account, fishermen s pension administration account, agricultural insurance administration scheme, loans and advance account, livestock insurance compensation, payment of medical assistance, and paddy cultivation compensation under the examination of cash books and payment vouchers were carried out. In addition, examination of the receipt of capital provisions, recurrent receipts, remitting of paddy cultivation insurance premia, issuing receipt books, and the remittance of the received livestock insurance premia were inspected. Further, purchasing of assets (LECO), transfer of assets (CWE), purchasing of capital assets, repairing of vehicles using capital provisions, inspection of investments, agricultural insurance scheme, fishermen s insurance scheme, payment of overtime transport allowance, payment of distress loans, recovering loan balances, payment/settlement of advances were carried out. Petty cash book and payment vouchers, were inspected and the audit inquiries in Ampara, Kandy, Kurunegala were conducted under the district administration account. 32

33 Remitting Livestock Insurance premia and proposals, charging and remitting supplementary crops premia and proposals, insuring agricultural implements, charging and remitting insurance premia by lending agencies (Matale, Kurunegala), inspection of the issuance of receipt books and insuring by banks were examined covering activities of the Development Division. (Insurance and Operations) In addition, payment of livestock insurance compensation (Vavuniya), payment of Suwasetha insurance benefits, payment of livestock insurance compensation (Galle), payment of paddy cultivation insurance (Galkiriyagama, Puttalam), payment of supplementary crop compensation (Anuradhapura), charging insurance premia and payment of compensation (Anuradhapura), submission of future programs, achieving targets, progress reports were inspected. Payment of farmers pension, payment of death and disabled benefits, updating individuakl accounts, the procedure for the suspension of the farmers pension, the process of transferring the pension to the spouse, identifying pensioners who have not claimed pensions for 06 successive months and dead pensioners, recovering premia in arrears through agencies and officials), fishermen s pension investments, payment of administrative expenses were examined in relation to the Pension Division. Under the examination of district offices, Vavuniya and Kurunegala district offices were examined. 33

34 Finance Division Accounts 34 Back

35 Finance Division Accounts Financial Summary The year 2011 was the most successful in the history of the Board, posting the highest ever income of Rs million since its inception. For the extensive damages caused to vast extents of insured cultivated lands and livestock by flash floods resulting from torrential rains in the predominantly agricultural districts of Anuradhapura, Polonnaruwa, Batticaloa, Trincomalee and Ampara, compensation was paid efficiently and the record income was a result of farmers and banks focusing more on agricultural insurance. The Farmers Pension and Social Security Scheme implemented by the Board, ran into a crisis during the current year and the payment of pension had to be delayed in the months of October, November and December due to difficulties experienced in securing funds. 35

36 Profitability Agricultural Insurance Scheme Operation Profit Operation expenditure Insurance premium income Operational Profit (Rs Mn) Operational Expenses (Rs Mn) Income from insurance premia (Rs Mn) Owing to the payment of greater attention to the insurance activities in keeping with the restructuring programme implemented in the Agricultural and Agrarian Insurance Board since 2008, the income of Rs million from agricultural insurance in 2007, increased up to Rs million in Due to the continuation of that arrangement, the income increased by 18% up to Rs million in 2009, and in 2010 it had risen up to Rs 105 million. This upward trend continued in 2011, with the Board posting a record income of Rs. 157 million. 36

37 Farmers Pensions and Social Security Benefits Scheme Income Operational expences Income (Rs Mn) Operational expenses (Rs Mn) Farmers Pensions and Social Security Benefits Scheme From 2004 onwards, an income sufficient for covering the operations cost of the scheme has been recorded. The major reasons for this situation are the raising of the minimum pension from Rs. 200/= to Rs. 1000/= without a corresponding rise in the income from premia and addition of around 15,000 new pensioners annually on reaching 60 years of age. However, the enlistment of contributors to the Farmers Pension Scheme was not encouraged. As the promotion of a scheme without a proper financial feasibility study is likely t. further aggravate the future problems, no publicity was given to the enlistment of members for this scheme. In August 2010, the Farmers Pension Scheme Fund reached the zero level, however the Board continued to pay the Farmers Pension utilizing the other funds available with the Board up to October this year. It has been estimated that the existing liability for farmers who have contributed to the Farmers Pension Scheme amounts to Rs. 43 billion. 37

38 Fishermen s Pensions and Social Security Benefits Scheme Operational Expenses Income Fishermen s Pensions and Social Security Benefits Scheme The liability of the Board towards the fishermen who have contributed to the Fishermen s Pensions Scheme around Rs. 1.9 billion and the Board has so far been able to sustain the Fishermen s Pensions Scheme with the available funds. However if the existing pensions scheme for fishermen is to be continued further, it is projected that by it will reach zero level. 38

39 Overall Schemes and Consolidated Financial Statements For the year Back

40 40

41 41

42 Financial Statements as at 31 December 2011 Agricultural Insurance Scheme 42 Back

43 AGRICULTURAL & AGRARIAN INSURANCE BOARD AGRICULTURAL INSURANCE SCHEME BALANCE SHEET AS AT 31 st DECEMBER 2011 ASSESTS Non- Current Assets NOTES Rs. Cts. Rs. Cts. (Restated) Plant, Property & Equipment 1 18,595, ,949, ,595, ,949, Current Assests 2 762,939, ,587, TOTAL ASSETS 781,535, ,537, EQUITY & LIABILITIES Capital & Reserve Government Grant 50,000, ,000, A.A.I.B. Accumulated Deficit 3 72,640, (9,974,291.76) Government Grant - Capital 4 11,349, ,798, Other Funds A.A.I.B Reserve Fund 5 15,883, ,822, Farmer's Life Insurance Fund 6 513,653, ,043, Staff Medical Insurance Fund 1,945, ,559, ,481, ,425, ,471, ,249, Non - Current Liabilities Government Loan-Capital Farmers Trust Fund - Loan 2,272, ,200, Provision For Gratuity 31,214, ,569, ,486, ,769, Current Liabilities 7 82,576, ,517, TOTAL EQUITY & LIABILITIES 781,535, ,537, These financial statements are in compliance with the requirements of the SriLanka Accounting standards. Head of Finance The Board of Directors is responsible for the preparation and presentation of these financial statements. Signed for and on behalf of the Board by:.. Chairperson Member of Director Board Agricultural & Agrarian Agricultural & Agrarian Insurance Board Insurance Board 43

44 AGRICULTURE & AGRARIAN INSURANCE BOARD AGRICULTURE INSURANCE SCHEME INCOME STATEMENT FOR THE YEAR ENDED 31 st DECEMBER REVENUE NOTES Rs. Cts. Rs. Cts. PREMIUM - Insurance ,417, ,062, Interest ,268, ,922, T O T A L 168,685, ,985, Less: Operating Expenditure Indemnity 9.01 (57,352,430.17) (268,685,122.41) Operational Expenses 9.02 (10,117,768.15) (5,628,607.31) (67,470,198.32) (274,313,729.72) Operational Surplus 101,215, (149,328,370.88) Add: Govt. Grant for Admin expenses 62,750, ,500, Other Income 10 6,248, ,011, ,998, ,511, ,213, (60,816,994.27) Less: Expenses Administrative Expenses 11 (82,294,896.19) (86,328,111.92) Finance & Other Expenses 12 (243,473.06) (261,416.38) Total Expenses (82,538,369.25) (86,589,528.30) NET SURPLUS / (DEFICIT) 87,675, (147,406,522.57) Less : Provision For A.A.I.B Reserve Fund 5,060, Net Surplus/ (Deficit) After Provision 82,614, (147,406,522.57) 44

45 AGRICULTURE & AGRARIAN INSURANCE BOARD AGRICULTURE INSURANCE SCHEME STATEMENT OF CHANGES IN EQUITY FOR THE 31st DEC Govt. Grant for Accumulated AAIB Life Insurance Staff medical Capital Deficit Reserve Fund Fund insurance fund Rs.'000 Rs.'000 Rs.'000 Rs.'000 Rs.'000 Balance as at 31 Dec ,672 60,928 10, , AmotizationsGove: Grant up to 2009 (76,504) 76,503 Amotization Gov. Grant 2010 (2,370) Prior year adj. Addition during the year: 65, Govt. Grant 3,000 Net Surplus /(Deficit) (147,406) Balance as at 31 Dec ,798 (9,975) 10, ,043 1,559 Balance transfer from F.P.S Add: Prior year adj. Adj: balance as at 31st Dec.2010 Addition during the year: 5,061 59, Govt. Grant 1, Depricition (1,919) Amotization Gov. Grant Farmers Pens (19,530) Net Surplus /(Deficit) 82,615 Transfer to the reserve (20,449) 82,615 5,061 59, Balance as at 31 st Dec ,349 72,640 15, ,653 1,945 45

46 AGRICULTURE & AGRARIAN INSURANCE BOARD AGRICULTURE INSURANCE SCHEME CASH FLOW STATEMENT FOR THE 31st DEC Rs. Cts. Cash Flows from Operating Activities Net Surplus / (Deficit) 87,675, Adjustment for - Depreciation 5,376, Adjustments in respect of Prior year - 5,376, Profit / loss on disposal of Property, Plant & Equip. (3,806,792.22) Provision for Retiring Gratuity 2,387, Operating Surplus before working capital changes 91,632, (Increase)/ Decrease in Inventories (922,343.27) (Increase)/ Decrease in Receivables (123,743,138.93) (Increase)/ Decrease in Interest Receivable 13,038, (Increase)/ Decrease Receivable Premium (10,139,491.92) (Increase)/ Decrease in Deposits & Prepayments 2,520, (Increase)/ Decrease in Advances 326, Increase /(Decrease) Provision For Indemnity (191,250,000.00) Increase /(Decrease) Provision For Contingencies (153,000.00) Increase /(Decrease) Provision For Printing 270, Increase /(Decrease) Refundable Deposit Increase /(Decrease) Pre-premium advance 1,795, Increase /(Decrease) Other Payables 484, Increase /(Decrease) Accrued expenses (4,087,758.66) (311,859,619.22) Cash Generated from Operations (220,226,804.61) Retiring Gratuity - Paid (2,742,641.92) Net Cash Flows from Operating Activities (222,969,446.53) Cash Flows from Investing Activities Government Grant for Capital expenditure 1,000, Medical Fund 385, Amotization of Government Grant (21,448,858.31) Disposal Assets 415, Life Insurance Fund 59,609, Farmers Trust Fund (927,499.92) Investments during the year 189,518, Purchases of Property, Plant & Equipment (5,438,329.00) Proceeds from sale of Property, Plant & Equipment 3,806, Net Cash Flows from Investing Activities 226,920, Cash Flows from Financing Activities Proceeds from long term borrowings - Repayment of long term borrowings - Net Cash Flows from Financing Activities - 46 Net Increase / ( Decrease) in Cash & Cash Equivalents 3,951, Cash & cash equivalents at the beginning of the year 9,719, Cash & cash equivalents at the end of the year 13,670,286.53

47 AGRICULTURAL & AGRARIAN INSURANCE BOARD AGRICULTURE INSURANCE SCHEME SIGNIFICANT ACCOUNTING POLICIES FOR THE YEAR ENDED 31 ST DECEMBER GENERAL Basis of Preparation 1 The Balance sheet, income statement, statement of changes in accumulated Fund, statement of cash flow and Accounting policies and Notes to the accounts of the Board are prepared in accordance with the Accounting standards laid down by the institute of Chartered Accountants of Sri Lanka. 2 The Financial statements of the Board are Prepared under the historical cost Convention. 3 No adjustments has been made for inflationary factors affecting the financial statements. 4 The Financial statements of the Board are Prepared in Sri Lankan Rupees. 5 The Financial statements of the Board have been drawn up in conformity with the Agricultural & Agrarian Insurance Act Taxation The Board is exempt from income tax in accordance with the inland revenue Act No.22 of 1990 and amendments there too Comparative Information Comparative Figures have been adjusted according to policy Changers 02. ASSETS AND BASIS OF THEIR VALUATION Assets classified as current assets on the balance sheet are cash and bank balances and those which are expected to be realized in cash during the normal operating cycle or within one year from the balance sheet date, whichever is shorter Property, Plant & Equipment, and Depreciation Property, Plant & Equipment Property, Plant & Equipment are states at cost less accumulated depreciation The cost of property, Plant & equipment is the cost of purchase or contraction together with any incidental expenses incurred in bringing the assets to its working condition for its intended use. Expenditure incurred for the purpose of acquiring, extending or improving assets of a permanent nature by means of which to carry on the services provided or to increase the capacity of the services provided has been treated as capital Expenditure. 47