All over the world, agriculture is synonymous with uncertainty and risks. On an estimate, the agriculture sector contributes around 24 percent to the GDP and any change in the same can have multiple effects on the economy. The agricultural growth and the economic growth are inevitably linked with each other. Nowadays, the Indian government has also been showing great concern about the risks and uncertainty related to agriculture. We are all aware of the avoidable deaths of farmers in Maharashtra and many other states of India. These farmers got caught in a debt trap that had a disturbing effect on them and their family.

A crop insurance plan assists in the stabilization of crop production and related income of the farmers. It assists in the best allocation of resources in the production procedure. It becomes more of a necessity considering the current scenario of farmers and agricultural-related issues. it is a need or necessity and many other things. This article will help you understand about crop insurance, what it covers, benefits etc.

Source – Slide Share

What Is Crop Insurance?

Basically, agricultural producers such as farmers, ranchers and other people purchase crop insurance as it assists in protecting themselves against loss of their crops due to natural disasters like hail, drought and floods or the loss of revenue because of decline in the prices of agricultural commodities.

Benefits of Crop Insurance in India

Yield Protection: This plan provides required coverage to farmers against a production loss for crops. It also offers preventive planting and replant security.

Revenue Protection: It is one of the most common plans. It acts like a tool that allows farmers to manage their yield and price risks.

Revenue Projection with Harvest Price Exclusion: This is basically the same as a Revenue Protection policy, except that the cost of insurance is based upon the anticipated price only.

Group Risk Protection and Group Risk Income Protection: It protects the farmers and crops from any disastrous loss.

There are many more benefits that the government is providing for better assistance.

Need or Necessity

There is a slight difference between these two words; a need is something which is required on an immediate basis and necessity is what you can't live without. Crop insurance has become more of a necessity for our framers today, especially after the growing instances of farmer suicides after a crop failure. The main culprit behind this is the failure of the famer to come out of the debt trap that he had taken for cultivating his fields. A crop insurance plan could prove a life saver by providing financial assistance when it is required the most.

Source – Ibef

In 1999, the prime minister introduced a crop insurance scheme known as Rashtriya Krishi Bima Yojana (RKBY) under the National Agricultural Insurance Scheme (NAIS). It is compulsory to participate in RKBY for farmers growing notified crops and acquiring crop loans from the recognized credit Institutions. In case of the farmers who have a loan, the sum insured amount is equivalent to the crop loan amount. A farmer can insure his/her crops afar of the value of brink yields level up-to 150% of the normal yield of the notifying area on the disbursement of premium at commercial rates.

Why Should You Consider A Crop Insurance Plan?

For a farmer, the crop is like his child, he wants to take care of it in any situation and protect it from unwanted calamities that can spoil it completely. Also, the growing number of farmer deaths makes it more essential to have a financial assistance at the time of crop failure time. If you have a crop insurance plan, then you can protect your crop or can provide financial coverage for the same in case of:

• Fire & Lightning Storm
• Cyclone
• Hailstorm
• Typhoon
• Tempest
• Hurricane
• Tornado Flood
• Inundation & Landslide Drought
• Dry spells
• Pests / Diseases

And many more such similar situations

What Can Farmers Do With A Crop Insurance Plan?

As we had discussed earlier, with the help of crop insurance plan a farmer will get financial assistance in case of crop failure or any other agriculture related issues. The farmers can receive an indemnity amount only for the threshold and average crops difference and also for the loan amount. With the help of this, farmers can easily manage expenses in case of crop failure.

The need of the hour is to further strengthen the crop insurance portfolio with multiple products that cover diverse risks. Some of the available crop insurance products that are currently in the market are excess rainfall insurance, sowing failure risk cover, draught insurance plan, and many more.

For taking advantage of the crop insurance schemes, the interested farmers have to list themselves with the insurance company. The insurance companies offer appropriate coverage that includes the minimum support price guarantee or market price from the past. Farmers are required to pay the premium and some policies are available at very low price. In the early stages, government shares the load of premium payment. During harvest, if the market price falls below a definite price, then the insurance company pays the compensation.

Crop insurance in India

A crop insurance plan associating institutional credit (crop loan) was recommended by Prof. Dandekar in 1976 and this plan known as CCIS1 was executed from Kharif season in 1985 at India level. Commercialization of crop insurance plans has increased in India. The variation in the price of the products has increased the income of the farmers significantly. Insurance of crop production offers a relief to the farmers when the crop is damaged by an attack of pests, flood, drought or any other condition. It provides financial support that helps farmers in overcoming tricky situations.

Sourec – Downtoearth

What Does the Future Hold?

In India, there are around 100 million farmers who work diligently and still seem to suffer the most. Their work is full of risk as it is dependent on the unexpected climatic patterns which can change any moment. It becomes the duty of the Government to consider about the well-being of farmers and reducing the risks related with agricultural activities in India.

A weather-based insurance plan will assist the farmer in quicker claim settlement. It is also available at lower premiums so the farmers can buy it easily. Keeping all these things in mind, the union Government has come out with a new Crop Insurance Scheme by the name of- Pradhan Mantri Fasal Bima Yojna.

Pradhan Mantri Fasal Bima Yojna is the newest crop insurance policy launched by Prime Minister Narendra Modi for assisting farmers. The new scheme will provide coverage against local-level calamities such as hail storms and landslides and even offer coverage to the farmers if they are unable to sow crops due to inclement weather. Also, the scheme will cover post-harvest losses due to cyclonic and unseasonal rains.

Smartphones will be used to capture and upload data on crop cutting (to estimate loss in yield) to reduce delays in settling claims, remote sensing will be used to reduce the number of crop-cutting experiments.

Agriculture, without any doubt is the backbone of our country and our economic growth depends on how well the agri sector performs in the coming years. The growing number of farmer suicides over crop failure is not a good sign and the situation needs to be controlled. The new scheme is a good step towards that direction but it is too early to comment on it as it neds to be well implemented first at the grass root level. Till then, the existing crop insurance schemes will have to play their part in ensuring financial assistance to farmers in adverse conditions.