Apr 20, 2015

How long will we continue to have a primitive form of crop insurance?



My daughter, studying in the US, recently shifted to a new flat in the suburbs of Los Angeles.  I went to Google maps on the internet, and after a few minutes of tracking, was able to locate her house on the map. The picture of the building where the flat was located was in front of me. Looking at the locality, the surroundings and the landscape around, I became confident that she’s living in a decent and safe locality.

Why I am narrating this is to explain how technology has made it possible for us to even spot a house thousands of miles away and also counts the number of trees. Forest cover is being determined by satellite images. Crop estimates are being prepared using remote sensing data. But when it comes to assessing crop losses that farmers suffer from weather anomalies, the insurance companies backtrack. If a farmer’s crop is completely destroyed, the crop damage that the insurance companies offer to compensate him is the average loss in 70 per cent of the block.

This primitive insurance system prevails at a time when unseasonal rains, hailstorm and strong winds have caused extensive damage to the standing crops. With crop damage extending to over 11 million hectares in 14 States, crop losses have already dealt a severe blow to farmers. With rains continuing to dampen farmer hopes, and with nearly 200 farmers committing suicide, many of them dying from shock, an effective crop insurance scheme could have minimized the blow.
If your car gets a hit, you can claim the damage. If your house is burnt down the insurance company will pay compensation irrespective of whether other houses in the colonies suffered or not. Why then an average in a block is taken as a measure for crop losses suffered by a farmer in a village is something I have never been able to understand. It is simply the failure of the government to make it obligatory for the insurance companies to provide per unit coverage to farmers that has left the farming community hapless. Insurance companies will obviously resist, but the government must ensure that they are made to deliver. Crop loss assessment must shift per unit basis, insuring each and every farmer.

But for nearly three decades, I have watched with dismay the reluctance on the part of successive governments to provide for any meaningful crop insurance plan for farmers. The comprehensive crop insurance scheme that the Ministry of Agriculture has now prepared – called, the National Crop Income Insurance Scheme (NCIIS) – and expected to be soon piloted in 50 districts across the country, is unlikely to provide any succor to the beleaguered farming community facing crop losses. What shocks me is that even after three decades, all that the government has managed to come up with is a shoddy proposal, a rehash of an earlier failed Farm Income Insurance Scheme introduced in 2003, and withdrawn in 2004.

As the name suggests, the scheme is designed to provide insurance against fall in prices as well as drop in crop yields. In case of yield losses from natural calamities, a disease attack or otherwise, it still follows the primitive methodology of basing the compensation on 70 per cent of the average loss in a district. This only shows that the planners haven’t learnt anything from the technological improvements.  The NCIIS draft does illustrate 4 probable scenarios and the compensation that a farmer will get in each of these. For instance, if a farmer’s yield is 4 tonnes/hect and indemnity being 70 per cent, the compensation would be worked out based on 2.8 tonnes only.

The guaranteed income that the farmers will get under the new insurance scheme would be to a maximum of 20 per cent of the price fall (against the Minimum Support Price) that a farmer suffers. It is based on a threshold yield, the average yield for past 7 years in a district. In other words, if the wheat MSP is Rs 1450 per quintal, and the farmer gets only Rs 900 by selling it openly in the market, the assured price that the farmer will get is Rs 900 plus 20 per cent of the gap between market price and MSP. Against Rs 1450, a farmer under the new insurance scheme can expect a maximum of Rs 1110 per quintal. This is distress price. If a distress price is all that the government assures it will provide to farmers, I think the message is clearly on the wall. Farmers must quit agriculture. 

The only good news on this front that I can share is Madhya Pradesh chief minister’s promise of setting up a State Crop Insurance scheme wherein farmers will be insured on per unit basis, and not on block averages. I hope more and more chief ministers understand the need for a crop insurance that is effective and meaningful. 

Govt lets down farmers yet again. Hindustan Times, Chandigarh.
April 20, 2015. 

1 comment:

चन्दन said...

Very Nice article. thoughtful. and nice blog, too.