Apr 3, 2015

Making some sense of crop insurance

Crop damage from unseasonal rains, hailstorm and strong winds has been quite widespread in India, Mar 2015. -- ANI photo

Unseasonal rains, hailstorm and strong winds that appeared in three phases beginning the end of February have already done an extensive damage to the standing crops. With crop damage extending to over 181 lakh hectares in 14 States, crop losses have already dealt a severe blow to farmers. But with more rains expected in the next few days just before the wheat harvesting normally begins, more trouble awaits farmers.

According to preliminary estimates of the Ministry of Agriculture, Uttar Pradesh and Rajasthan have taken the maximum brunt, followed by Haryana, Madhya Pradesh, Maharashtra, Jammu & Kashmir, Punjab and Himachal Pradesh. Crop losses have also been reported from West Bengal, Andhra Pradesh, Telengana and Uttarakhand.

Public memory is very short. While it is being said that the present spell of unseasonal rains is the worst in the last 25 years, the fact is that unseasonal rains accompanied by hailstorm had also done extensive damage to standing crops in 24 lakh hectares in Madhya Pradesh and 18 lakh hectares in Maharashtra a year earlier, in March 2014.

While 43 farmers had committed suicide in the Bundelkhand region of Madhya Pradesh (and adjoining Uttar Pradesh) and another 40 in Marathwada region of Maharashtra last year, the death toll this year from the unseasonal rains in March has exceed 67 in Uttar Pradesh alone. More deaths have been reported from Rajasthan, MP and Maharashtra. But the loss to human lives is no indicator of the severity and extent of the crop damage the country has witnessed. It is the extensive damage to standing wheat, oilseeds, and pulses and in addition the damage to fruits and vegetables from hailstorm that has aggravated the agrarian crisis.   

Although Prime Minister Narendra Modi did assure farmers of immediate help and relief when he spoke to them in his radio programme Mann ki Baat on Mar 22, I am reminded of an insensitive remark made last year by the former Agriculture Minister Sharad Pawar when he said unusual rains and hailstorms are not uncommon and, therefore, appealed to farmers to show courage. But Pawar was quick to assess the damage accruing to sugar mills from a reduced sugarcane harvest even before the expert teams had visited the affected regions and assessed the crop losses.  

What has made the difference this year is that besides the media repeatedly highlighting the extensive damage to standing crops, the NDA is keen to ward off the anti-farmer tag it has earned especially after its failure to provide 50 per cent profit in the minimum support price (MSP) that it had promised before the elections. With the government already under flak for pushing in an anti-farmer land acquisition bill, it swung into action to salvage its popular image of being farmer unfriendly. Aerial surveys were conducted; top ministers travelled to the affected areas; chief ministers were quick to announce a series of measures including deferring interest payments on crop loans, waiver of electricity bills, immediate assessment of crop losses, and came up with promises of a higher compensation package. We will have to wait and watch to know how much of it actually translates for farmers once the weather returns to normal. 

In the past we have seen farmers receiving relief cheques of Rs 8, Rs 10, Rs 215, Rs 1305 and so on. Year after year we have read news reports of how farmers who have seen their crops affected by inclement weather had been poorly compensated by indifferent State governments. After months of waiting, when a farmer gets cheque that is not even worth presenting before a bank, it only shows the contempt and cruelty by which the farming class is treated. It is therefore heartening to see this year a lot more seriousness to help the affected farming families. Already, many States have announced a higher relief than what is spelled out under the provisions of the State Disaster Relief Fund.  

Earlier, I have watched with dismay the reluctance on the part of successive governments to provide for any meaningful crop insurance plan for farmers. While in urban areas, Insurance companies have appropriate plans to provide cover for every individual, house and automobile, for farmers the crop losses are assessed only at the block level. A farmer at best can get compensation for an average crop loss suffered in a block even if his own loss in his crop field is several times higher. Furthermore, not many farmers actually know that they have been insured, and not many Insurance companies know what the farmer is cultivating. They just pick up the premium from the banks, and disappear to return later at the time of collecting the next premier. This is primarily the reason why farmers have never been enthused to take to crop insurance.

Insurance companies say that it is practically impossible to ascertain the loss per farm. I don’t agree. This is just an apology to avoid adding on to the operational costs. In an age when it is easy to track the movement of every truck carrying foodgrains, I don’t see why the same technology cannot be used for mapping each and every farm in the country. At a time when remote sensing is being used to count the number of trees, it should not be difficult to measure the crop losses in each and every farm or a cluster of farms to begin with. Therefore I have two suggestions to make crop insurance meaningful:  

* IFFCO-Tokio General Insurance Company has launched a Barish Bima Yojna in collaboration with Karnataka government. It provides crop insurance coverage to a minimum group of 25 farmers having 100 acres of cultivable land. Although insurance amount was awarded on the basis of the amount of rainfall received, there is a need to improve it further to add yield losses suffered by farmers. A little more effort can succeed in turning this into a comprehensive crop risk insurance model for farmers. And subsequently, using the latest technology, it should be possible to come down to calculate the losses that each individual farmer suffers.

* Dhan Foundation in Tamil Nadu has come up with the concept of Micro-Insurance. Borrowed from the Netherlands where Micro-Insurance has worked very well. Let me illustrate. Mutual crop insurance was done for a major pest called red hairy caterpillar. Farmers were advised to take preventive measures, go in for crop rotation, and at the same time the yield loss was compensated. The premium was roughly 30 per cent of the sum assured. Similarly, ground nut was insured against weather fluctuation. A Mutual Insurance Committee is formed among the villagers, which decides on actual premium and also ascertains crop losses. The committee takes care to ensure proper claim settlement, which has often been completed in one month.

Two prerequisites are absolutely necessary. The first is the need to set up rainfall gauges in each and every village. The second is to enhance the budgetary provision for crop insurance from the existing Rs 3,000-crore. Not providing enough financial support for strengthening crop insurance only shows how low it stands in national priority. #

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