CROP INSURANCE 1 INTRODUCTION OF CROP INSURAN CEThe name of this insura nce itself tells that it is related to the agricultural producers. It includes cultivators, ranchers, and other related people who protect themselves from the loss of their harvests and crops. It can be due to some natural tragedies like floods, drought, and sleet. It also include the financial loss occurred due to fall of agricultural products in the market. The two parts of crop insurance are crop-defer insurance and crop- profits insurance. There are two sub categories of crop-defer insurance: (1) crop-sleet insurance (2) Multi-threat crop insurance Crop-sleet insurance is normally accessible from private insurance companies. The reason is that the sleet is a slight danger which crops up in limited small areas. The build up losses be likely not to crush the wealth assets of private insurance companies. This type of insurance first started in Germany and France in 1820s. Multi-threat crop insurance is a mutual form of crop ±sleet insurance with price insurance. It gives the coverage to turn down prices which take place all through the rising period of crops.
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50% subsidy in premium is allowed in respect of Small & Marginal
farmers to be shared equally by the Govt. of India and State/UT Govt. The
premium subsidy will be phased out on sunset basis in a period of three tofive years subject to review of financial results and the response of farmers
at the end of the first year of the implementation of the Scheme.
Unique parametric insurance based on named perils linked to plantpopulation
2. Available for potato growers contract farming in the potato growingareas
3. Maximum liability is Rs. 25,000 per acre
4. Based on partnership model of ³grower ± producer ± financier ± insurer´
This insurance policy is applicable to Potato crop cultivated by thefarmers in different Potato growing parts of the country.
Scope of Cover This is an input cost cover starting from a week after planting till 7
days before harvesting. The insurance is by way of indemnity againstpecuniary loss suffered by the insured in respect of the cost of inputs onaccount of the loss or damage (death/ total damage of the plants leading to
reduction of the plant population below the threshold number) due to thehappening of the insured perils. It shall not apply to the loss of yield/production of potato crop resulting from the insured perils. The policyshall cover and indemnify the insured (in accordance with the claimassessment procedure) in the event of damage of potato crop leading toreduction of plant population below a threshold limit, occasioned by naturalcalamities like Flood, Cyclone, Storm, Frost and Pest & Diseases (except
Late Blight) etc. either in isolation or concurrently during the period of insurance.
Claim Procedure
On happening of any loss or damage, the insured shall give notice tothe company within 48 hours (directly or through the financing bank or through the participating organization) and subsequently shall submit a
claim in writing within 15 days after loss or damage. The insured shalltender to AIC all reasonable information, assistance and proofs inconnection with any such claim. The total cost of inputs per unit area of insurance covered under this Policy shall be deemed to be the amount asspecified in the policy, which shall be deemed to have been incurred at apercentage corresponding to the stage of cultivation. The amount of lossassessable under this policy shall be such sum as is arrived at after applying
the percentage of death/ damaged plants per acre to the amount of the cost of inputs per acre, at the stage at which the insured peril causing the lossoperates, subject to the terms, conditions, salvage, excess and any other deductions.The insured shall be required to furnish proof of insurance andany other document / proof specifically requested by AIC for the settlementof the claim.
W HEAT INSURANCE POLICY (Based on Temperature & Biomass/Crop Vigour)
1.Unique Index insurance product based on biomass (Normalized DifferenceVegetative Index) and weather parameters like temperature & rainfall
2. Available in Haryana & Punjab presently.
3. Maximum liability is Rs. 8,000 per acre with flexible premiums
Wheat Insurance Policy is a unique technology based insurance
product combining crop vigour/ biomass (NDVI) and weather (temperature)parameters. The NDVI component of the cover measured at peak cropvigour stage provides effective risk management aid to those wheat farmerswho are likely to be impacted by poor growth of the crop arising out of non-preventable natural factors / incidences.
The most important benefits of this insurance linked to biomass trigger
are:Trigger events could be measured using high technology standards
based on satellite imagery from remote sensing technology. These could beindependently verified & measured and accurate. It allows for speedysettlement of indemnities, even before the crop is ready for harvesting.
Agriculture Insurance Company hereby agrees, subject to the terms,conditions and exclusions herein contained, or otherwise expressed herein tocompensate the insured, in the manner specified herein, against thelikelihood of diminished wheat output/yield resulting from a) lower biomass/ crop vigour as measured using satellite imagery in terms of Normalized
Difference Vegetative Index (NDVI) within the specified taluka / block preferably during the month of February (corresponding to peak crop vigour,subjected to availability of satellite image) and / or b) high temperature (indegree centigrade) consecutively for specified number of days abovespecified levels in the 1st and / or 2nd fortnight of March as measured atR WS.
Period of Insurance:The insurance operates during peak wheat crop growth stage, more
particularly during parts of February and March
How claims become payable:
In the event that, in the geographical location and during the time
period specified in the Schedule to this policy, the current NDVI (scaledvalue) falls short of the specified trigger level,the benefit payable to the insured shall be a sum specified corresponding tothe trigger level; and/or In the event that, in the geographical location andduring the season specified in the Schedule to this policy the maximumtemperature of specified number of consecutive days, as recorded at R WS ishigher than the specified trigger levels during 1st fortnight and / or 2ndfortnight, the benefit payable to the insured shall be a sum specifiedcorresponding to the trigger level.
Premium
Premium chargeable would be statistically/actuarially calculatedbased on the geographical area, the triggers specified and the biomass and
temperature patterns of the specified geographical area in the historicalperiods.
The scheme would operate on the basis of ³Area Approach´ i.e., Defined
Areas for each notified crop for widespread calamities and on an individual
basis for localized calamities such as hailstorm, landslide, cyclone and flood.The Defined Area (i.e., unit area of insurance) may be a Gram Panchayat,
Mandals, Group of Mandals or Districts etc. to be decided by the State
Government. However each participating State Government will be required
to reach the level of Gram Panchayat as the unit in a maximum period of
three years
Sum insured /limit of coverage:
The Sum Insured (SI) may extend to the value of the threshold yield of theinsured crop at the option of the insured farmers. However, a farmer may
also insure his crop beyond value of threshold yield level upto 150% of
average yield of notified area on payment of premium at commercial rates.
In case of Loanee farmers the Sum Insured would be atleast equal to
the amount of crop loan advanced. Further, in case of Loanee farmers, the
Insurance Charges shall be an additional to the Scale of Finance for the
purpose of obtaining loan. In matters of Crop Loan disbursement
procedures, guidelines of RBI/NABARD shall be binding.
Premium Rates:
Premium rates are 3.5% for bajra, and oilseeds and 2.5% for other Kharif
crops, 1.5% for wheat, and 2% for other rabi crops. In case the rates worked
out on the basis of actuarial data are less than the prescribed rate, the lower
rate will be applicable.
NATURE OF COVERAGE AND INDEMNITY:-
Under National Agricultural Insurance Scheme Compensation will becalculated for the notified crops in the notified areas on the basis of average
yield assessed on the basis of Crop Cutting Experiments on the following
1. Once the yield data is received from the State/UT Govt. as per the
prescribed cut-off dates, claims will be worked out and settled by IA.
2. The claim cheques along with claim particulars will be released to theindividual Nodal Banks. The Bank at the grass root level, in turn, shall credit
the accounts of the individual farmers and display the particulars of
beneficiaries on their notice board.
3. In the context of localised phenomenon, viz., hailstorm, landslide, cyclone
and flood, the IA shall evolve a procedure to estimate such losses at
individual farmer level in consultation with DAC/State/UT. Settlement of
such claims will be on individual basis between IA and insured.
due to the causes specified in the crop provisions, such acreage may be
eligible for a prevented planting payment.For perennial crops, insurance
attaches each crop year on the calendar date specified in the crop provisions.
5.
Acreage Reports
The policyholder must annually report for each insured crop in the county the
number of insurable and uninsurable acres planted or prevented from being
planted if prevented planting is available for the crop, the date the acreage
was planted, share in the crop, the acreage location, farming practices used,
and types or varieties planted to the insurance provider on or before the
applicable acreage reporting date specified in the crop actuarial documents.
This report is used by the insurance provider to establish the amount o
coverage and premium for the crop. Insurance providers may deny coverageif the acreage report is filed after the applicable crop acreage reporting date.
6. Summary of Coverage
The insurance provider will process a properly completed and timely filed
acreage report, and issue to the policyholder a summary of coverage that
specifies the insured crop, the insured acres and amount of insurance or
guarantee for each insurance unit. The policyholder may make changes to the
filed acreage report, if permitted by the insurance provider.
7. Premium Billing
The annual premium is earned and payable at the time insurance coverage
begins. The insurance provider shall issue a premium billing based upon the
information contained in the acreage report no earlier than the premium
billing date specified in the crop actuarial documents. The premium billing
will specify the amount of premium and any administrative fees that may be
due. If the premium or administrative fees are not paid by the date specified
in the actuarial documents or policy, the insurance provider may assess
The Sum Insured (SI) may extend to the value of the threshold yield of the
insured crop at the option of the insured farmers. However, a farmer may also
insure his crop beyond value of threshold yield level upto 150% of average yield of notified area on payment of premium at commercial rates.In case of Loanee
farmers the Sum Insured would be atleast equal to the amount of crop loan
advanced. Further, in case of Loanee farmers, the Insurance Charges shall be an
additionality to the Scale of Finance for the purpose of obtaining loan.In matters of
Crop Loan disbursement procedures, guidelines of RBI/NABARD shall be
binding.
Transition to the actuarial regime in case of cereals, millets, pulses & oilseeds
would be made in a period of five years. The actuarial rates shall be applied at
District/Region/State level at the option of the State Govt./UT.
7. Premium subsidy:
50% subsidy in premium is allowed in respect of Small & Marginal farmers
to be shared equally by the Govt. of India and State/UT Govt. The premium
subsidy will be phased out on sunset basis in a period of three to five years subject
to review of financial results and the response of farmers at the end of the first year of the implementation of the Scheme.
The definition of Small and Marginal farmer would be as follows:
Small Farmer: A Cultivator with a land holding of 2 hectares (5 acres) or less, as
defined in the land ceiling legislation of the concerned State/UT.
Marginal Farmer: A Cultivator with a land holding of 1 hectare or less (2.5 acres).
8. Sharing of risk:
Risk will be shared by IA and the Govt. in the following proportion.Food
crops & Oilseeds: Till, complete transition to Actuarial regime in a period of five
years takes place, claims beyond 100% of premium will be bone by the Govt.
Therefore, all normal claims, i.e. claims upto 150% of premium will be met by IA
and claims beyond 150% shall be paid out of Corpus Fund for a period of three
years. After this period of three years claims upto 200% will be met by IA and
above this ceiling out of the Corpus Fund.
Annual Commercial crops/annual Horticultural crops: Implementing Agencyshall bear all normal losses, i.e claims upto150% of premium in the first three
years and 200% of premium thereafter subject to satisfactory claims experience.
The claims beyond 150% of premium in the fist three years and 200% of premium
thereafter shall be paid out of Corpus Fund. However, the period of three years
stipulated for this purpose will be reviewed on the basis of financial results after
the fist year of implementation and the period will be extended to five years if
considered necessary.
To meet Catastrophic losses, a Corpus Fund shall be created will
contributions from the Govt. of India and State Govt./UT in 50:50 basis. A portion
of Calamity Relief Fund (CRF) will be used for contribution to the Corpus Fund.
9. Area approach and unit of insurance:
The Scheme would operate on the basis of µArea Approach¶ i.e., Defined
Areas for each notified crop for widespread calamities and on an individual basis
for localised calamities such as hailstorm, landslide, cyclone and flood. TheDefined Area (i.e., unit area of insurance) may be a Gram Panchayat, Mandal,
Hobli, Circle, Phirka, Block, Taluka etc. to be decided by the State/UT Govt.
However, each participating State/UT Govt. will be required to reach the level of
Gram Panchayat as the unit in a maximum period of three years.
Individual based assessment in case of localised calamities, would be
implemented in limited areas on experimental basis, initally and shall be extended
in the light of operational experience gained. The District Revenue administration
will assist Implementing Agency in assessing the extent of loss.
10.Estimation of crop yield:
The State /UT Govt. will plan and conduct the requisite number of Crop
Cutting Experiments (CCEs) for all notified crops in the notified insurance units in
order to assess the crop yield. The state/UT Govt. will maintain single series of
Crop Cutting Experiments (CCEs) and resultant yield estimates, both for Crop
Production estimates and Crop Insurance.Crop Cutting Experiments (CCE) shall
be undertaken per unit area/per crop. On a sliding scale, as indicated below:
S
N.
Unit Area Minimum number of
C.C.E.s required to be
done
1. Taluka/Tehsil/Block 16
2. Mandal/Phirka/any other smaller unit area comprising
8-10 villages
10
3. Gram Panchayat comprising 4-5 villages 08
A Technical Advisory Committee (T.A.C.) comprising representatives from
N.S.S.O., Ministry of Agriculture (G.O.I.) and IA shall be constituted to decide the
sample size of CCEs and all other technical matters.
11. Levels of Indemnity & Threshold Yield:
Three levels of Indemnity, viz., 90%, 80% & 60% is corresponding to Low
Risk. Medium Risk & High Risk areas shall be available for all crops (cereals,
millets, pulses & oilseeds and annual commercial/ annual horticultural crops)based on Coefficient of Variation (C.V.) in yield of past 10 years¶ data. However,
the insured farmers of unit area may opt for higher level of indemnity on payment
of additional premium based on actuarial rates.
The Threshold yield (TY) or Guaranteed yield for a crop in an Insurance
Unit shall be the moving average based on past three years average yield in case of
Rice & Wheat and five years average yield in case of Other crops, multiplied by
the level of indemnity.
12. Nature of Coverage and Indemnity:
If the µActual Yield¶ (AY) per hectare of the insured crop for the defined
area [on the basis of requisite number of Crop Cutting Experiments (CCEs)] in the
insured season, falls short of the specified µThreshold Yield¶ (TY), all the insured
areas where IA has requisite infrastructure, a non-loanee farmer will have option to
send premium along with Declaration, directly to IA within the time limits.
Selection of the Banks will be on the basis of Service Area Approach (SAA)
of RBI or at the option of the Banks (Where co-operative banks have goodnetwork). The Department of Agriculture, Agricultural Statistics, Directorate of
Economics and Statistics, Department of Co-operation, Revenue Department of the
State Government will be actively involved in smooth implementation of the
Scheme.
The Scheme will be implemented in accordance with the operational
modalities as worked out by IA in consultation with Dept. of Agriculture & Co-
operation.
During each crop season, the agricultural situation will be closely monitored
in the implementing State/UT. The State / UT Department of Agriculture and
district administration shall set up a District Level Monitoring Committee
(DLMC), who will provide fortnightly reports of Agricultural situation with details
of area sown, seasonal weather conditions, pest incidence, stage of crop failure {if
any} etc.
The operation of the Scheme will be reviewed annually, and modificationsas may be required would be introduced. Periodic Appraisal Reports on the
Scheme would be prepared by Ministry of Agriculture, the Government of
India/Implementing Agency.
18. Implementing Agency (IA):
An exclusive Organization would be set up in due course, for implementation of
RKBY. Until such time as the new set up is created, the µGIC of India¶ will
1. Be a critical instrument of development in the field of crop production,
providing financial support to the farmers in the event of crop failure.
2. Encourage farmers to adopt progressive farming practices and higher technology
in Agriculture.
3. Help in maintaining flow of agricultural credit.
4. Provide significant benefits not merely to the insured farmers, but to the entire
community directly and indirectly through spillover and multiplier entirecommunity directly and indirectly through spillover and multiplier effects in terms
of maintaining production & employment, generation or market fees, taxes etc.
Since Independence, India has borne the brunt of a large number of natural
disasters like earthquakes, floods, drought and pest attacks. The main reason why
India is susceptible to such disasters is because of its geographical location,
weather and other physical features. The rising population of the country has
driven farmers to settle in risky areas like flood plains, drought-prone areas,cyclone-prone areas and seismic zones. Natural disasters leading to a failure of
crops play havoc with the economy of a country. Prices would rise to an extremely
high level and the poor would starve.
The best way to deal with such disasters is to be prepared for any
eventuality. Keeping this in mind the government has developed contingency plans
for farmers to tackle natural disasters before they strike. The government also
provides compensation and other financial aid to farmers who are affected by
natural disasters. This is done to encourage them to continue to invest in andproduce agricultural commodities.
The monsoons play a critical role in determining whether the harvest will be
bountiful, average or poor in any given year. Excess rainfall leads to the
overflowing of rivers, streams and lakes. This extra water fills low-lying fields andcreates a flood situation. Floods destroy not only lives and property but also the
entire crop production work carried out in the summer. Certain crops cannot bear
excess water and they die leaving the farmer with a burden of debt. The National
Commission on Floods has assessed the flood prone area in India to be around 12
per cent of the total area.
When floods take place, both the Central and State Governments announce
various plans to minimize the damage. Farmers are covered under schemes of the
government. Activities of the government include provision of shelter, food
supplies, clearing of debris and vocational training. The Prime Minister announces
compensation from the Prime Minister's National Relief Fund to the next of kin of
those killed in natural disasters whenever they occur
Drought
Drought is said to have occurred when the principal monsoon fails or is
deficient. It leads to crop failure due to insufficient irrigation, shortage of drinkingwater as well as undue hardship to the rural and urban community. There is no
provision for declaration of drought by Government of India. Drought is declared
for each State or part of the State by the State Governments. The important steps
followed in India to control and manage drought are as follows:
y Monitoring and early warning: The Indian Meteorology Department
carries out the function of drought monitoring and forecasting. The
agricultural department comes out with contingency plans to help farmers
save their crops in case a drought like situation emerges. Here is the latestweather situation and crop advisory prepared by the Indian Council of
Agricultural Research.
y Drought Declaration: States monitor rainfall at mandal or tehsil levels and
gather information from remote sensing agencies. If the information proves
that drought has occurred then the State Government may declare a situation
of drought. The Central Government then aides the financial and
institutional processes to provide relief to the affected.
y Monitoring and management of drought impacts: The Central
Government provides financial assistance in accordance with relief norms
laid by the Finance Commission. Assistance to the States is given in theform of Calamity Relief Fund, which is released to the States in two
installments, one in May and the other in October.
Plant Protection
One of the most significant pest management schemes run by the
government is the Integrated Pest Management Scheme (IPM) - External website
that opens in a new window. This scheme aims at the best mix of all known pest
control measures to keep the pest population below the economic threshold level or
ETL. The scheme is 100 per cent centrally sponsored. The Central Government
also runs a scheme to monitor and control the locust population.
The government has set up the National Plant Protection Training Institute
in Hyderabad to impart training in plant protection methods. This institute
specializes in human resource development in plant protection technology by
organizing long and short duration training courses on different aspects of plant
protection. It also imparts training to foreign nationals sponsored through bilateralprogrammes with various agencies.
More information on plant protection is available through pest management
and plant protection schemes of the Government.
Crop Insurance
Crop production depends on the vagaries of weather and prevention of
attacks from pests. As the weather is extremely hard to predict even for topprofessionals and pests can attack anytime, it helps to have some crop insurance.
This insurance protects you from most eventualities like floods, droughts, crop
ICICI LOMBARD TO PROVIDE WEAT HER COVERED IN 10 STATE
ICICI Lombard General Insurance Company has been given the mandate toprovide weather-based crop insurance for rabi season (2010-11) in MadhyaPradesh, Bihar,Tamil Nadu, Karnataka, West Bengal, Chhattisgarh, Jharkhand andHimachal Pradesh.
The insurance company will cover 69 districts ² 30 loanee districts
(farmers who have taken loans) and 39 non-loanee districts. The major crops thatICICI Lombard covers for the season are winter paddy, cotton, wheat, mustard,barley, maize, onion, potato, tomato, lentil, peas, arhar, jowar, fenugreek,coriander, cumin, methi, isabgol, brinjal among other crops.
Weather-based crop insurance provides cover against weather-related riskssuch as excess or deficit rainfall, variations in temperature and fluctuations inhumidity. Thisscheme facilitates immediate compensation based on certified datacollected from independent third party bodies such as Indian MeteorologicalDepartment (IMD) and National Collateral Management Services Ltd. (NCMSL).This transparent and objective method of claim settlement removes the need for carrying out field surveys. This makes the claim settlement a hassle-free process,as the beneficiary is not required to file a claim for loss to receive a payout.
ICICI Lombard in 2009-10 insured over 29 lakh farmers and over 19 lakhacres across 14 states.
Alok Agarwal, director (corporate), ICICI Lombard General Insurance,said, "Agriculture is a significant contributor to the Indian economy, accounting for 24% of the Indian GDP. The rural economy faces economic strain due to variationin agriculture production.Weather insurance protects the farmer against financialloss arising out of adverse weather conditions. We consider it to be our privilege tohave been chosen to provide weather-based crop insurance for farmers in 10
INDEPT H STUDY OF FARMERS SUICIDES, T HEIR CAUSES AND REMEDIES
One of the most disquieting development in the era of the neo-liberal policy
in India has been widespread occurrence of farmers¶ suicides in different parts of
the country including not only the drought prone areas of Andhra Pradesh,Karnataka and Maharashtra but also a State of heavy rainfall like Kerala, as also aState like Punjab with large areas under irrigation.With the preoccupation of theGovernment with the rate of economic growth and promotion of the private sector in the secondary and tertiary sectors, that is, industrial and service sectors, theagricultural sector and the sector of rural development were neglected. Thegovernment did not wake up for many years to attend to this phenomenon. The
Finance Minister was disturbed by the fall in the stock exchange and elated whenthe stock exchange rose. The Reserve Bank, forgetting its responsibility for theagricultural and rural sector, started concentrating on what it considered to be its
legitimate concern, namely, monetary policy and sound banking, mainly measuredin terms of profit and loss. It is estimated that more than one-and-a-half lakhfarmers committed suicide. This is indeed a black mark on the economicperformance of the government.
Even though the phenomenon of farmers¶ suicides started assuming serious
proportions, the then Chief Minister of Karnataka, S.M. Krishna, and the thenChief Minister of Andhra Pradesh, Chandrababu Naidu, looked upon themselves asthe CEOs of their States and found a sense of achievement in making Bangalore
the Silicon Valley of India and Hyderabad, a cyber city.W
hile they thought thatthis was the touchstone of their achievement, the rural voters suffering fromdrought rejected them and both lost power. In Maharashtra, the governmentneglected the phenomenon which was most striking in the Vidarbha area, until theHigh Court got seized of it and asked the Tata Institute of Social Sciences to studythe subject. The Government of Maharashtra then woke up and asked the IndiraGandhi Institute of Development and Research to make a survey and submit itsfindings. The Planning Commission also sent a team at the instance of the PrimeMinister to study the causes of farmers¶ suicides and propose suitable measuresand programmes. The State Government under pressure made some provisions and
after the Prime Minister¶s visit, the Central Government provided a financialpackage. Both these failed to stem the tide of farmers¶ suicides, suggesting that thepackage was not based on a correct understanding of the causes of farmers¶suicides. As the general elections are drawing near, the Finance Minister, in hisBudget speech, made a dramatic announcement of the write-off of loans of smalland marginal farmers and made a provision of Rs 60,000 crores, later increased toRs 71,000 crores, to enable the banks to write off the loans. This still leaves out the
This fundamental principle of insurance is critical to an understanding of thehistory of crop insurance. Agricultural production is subject to many uncertainties,
including natural disasters. Adverse weather, insect infestations and plant diseases
can severely reduce the yield or quality of a crop, wiping out a farmer's profits for
the whole year in a bad season.
The most important consideration, as far as insurers are concerned, is the
potential for catastrophic losses resulting in widespread and severe damage claims.
Many "perils," or causes of loss, to which farmers are exposed, such as heat and
drought, freezing temperatures and excessive moisture, can affect whole regions.
Droughts may also persist for extended periods so that farmers may suffer
successive losses. But there is one common weather-related disaster that generally