an overview of agriculture insurance in india dr. rajiv mehta adviser department of agriculture and...
TRANSCRIPT
An Overview of Agriculture Insurance in India
Dr. Rajiv MehtaAdviser
Department of Agriculture and CooperationMinistry of Agriculture
Govt. of India
Expert Meeting on Requirements of Catastrophe Insurance and Weather Risk Management Markets
World Meteorological OrganisationGeneva
5th to 7th December 2007
2
Vulnerability of Agriculture
Large population dependenceo In India, 70% population ruralo Two third livelihood depends on agriculture and allied activitieso 120 Million farm holdingso 107 million agriculture labour
Weak asset baseo Average size of operational holdings : 1.32 Hectareso 82% Holdings Small and marginal (2 or less than 2 hectares)o Human asset - Skill, education, health, information
Climate and Market aberrations o 60 percent agriculture rain dependento Diversity of climatic conditionso Occurrence of floods, droughts, pestso Logistics and connectivity (600 thousand villages)o Market vulnerability – disadvantage in price realisation
Annual Rainfall Distribution
74%13%
10%
3%
South West Monsoon
(June -Sept)
Pre Monsoon
( Mar –May )
North East Monsoon
(Oct –Dec )
Winter
( Jan - Feb)
Spatial Distribution of Rainfall
8%
33%
35%
24%Low Rainfall Zone(Less than 750 mm)
Very High Rainfall Zone
(Above 2000 mm)
High Rainfall Zone
(1125 – 2000 mm)
Medium Rainfall Zone
(750 to 1125 mm)
5
Diversity of Cropping Pattern
Geographical Area: 328 Net Cropped Area : 141Gross Cropped Area: 191Gross irrigated Area : 78
(in Million HA)
6
Monsoon Aberration 2002Drought 2002
July 2002 rainfall deficiency : - 49%
Monsoon 2002 rainfall deficiency : - 19%
21 out of 36 Met-Subdivisions received deficient/scanty rainfall
7
Socio – Economic Impact
• Spread – 1.8 million square kilometers
• 300 million people affected
• 700 million cattle Affected
Drought 2002
• Crop Area Affected - 62 million hectares
(30% of total crop area)
• Food-grains Production fall - 24 million tonnes from normal (12%)
• Drinking water shortage - 120,000 rural habitations and 500 Towns/ Cities
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Genesis of Crop Insurance in India • Vital for stable agricultural growth and risk management
• Modalities of crop insurance – Individual approach
• Necessitates reliable and accurate data of crop yields of individual farmers for a sufficiently long period
• Moral Hazards – Homogenous area approach
• Comprehensive Crop Insurance Scheme (CCIS) 1986• National Agricultural Insurance Scheme (NAIS) 1999-2000• Agriculture Insurance Company of India Limited (AIC)
– Incorporated in December 2002– Authorized Share Capital : Rs 15 Billions (USD 375 Millions)– Paid-up Capital Rs 2 Billions (USD 50 Millions)– Share holders Lead Public Insurance Companies and NABARD
• Rainfall Insurance
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National Agricultural Insurance Scheme (NAIS)
• To provide insurance coverage and financial support to the farmers in the event of failure of any of the notified crop as a result of natural calamities, pests & diseases.
• To encourage the farmers to adopt progressive farming practices, high value inputs and higher technology in Agriculture.
• To help stabilise farm incomes, particularly in disaster years.
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NAIS – Eligibility and Coverage
• Food crops (Cereals, Millets & Pulses), Oilseeds, Sugarcane, Cotton & Potato (Annual Commercial / annual Horticultural crops)
– Availability of past yield data based on Crop Cutting Experiments
(CCEs)– Requisite number of CCEs are conducted for estimating the yield during
the proposed season
• All farmers including sharecroppers, tenant farmers growing the notified crops in the notified areas are eligible for coverage
– Compulsory for Loanee farmers– Voluntary for others
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NAIS - RISKS COVERED & EXCLUSIONS • Comprehensive risk cover of yield losses due to non preventable
risks, – Natural Fire and Lightning – Storm, Hailstorm, Cyclone, Typhoon, Tempest, Hurricane, Tornado etc. – Flood, Inundation and Landslide – Drought, Dry spells – Pests/ Diseases etc.
• Losses arising out of war & nuclear risks, malicious damage & other preventable risks excluded.
• Sum Insured (SI)– extend to the value of the Threshold Yield (TY) of the insured crop at the
option of the insured farmers – beyond value of Threshold Yield level upto 150% of Average Yield (AY) of
notified area on payment of premium at commercial rates– Loanee farmers the Sum Insured would be at least equal to the amount of
crop loan advanced
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Premium Rates
• 1.5 % to 3.5 % of SI or Actuarial, which ever is less
• 50% premium subsidy to small and marginal farmers
• Seasonality discipline
• Indemnity– Area Approach– Shortfall in Yield X Sum Insured for the farmer
Threshold yield– Specific localised risk (Hail, floods, cyclone)
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NAIS – Business Statistics 1999-2000 to Kharif 2005
• FARMERS COVERED Millions 75.08
• AREA Million HA 121.99
• SUM INSURED Rs. Billion 706.91
• PREMIUM Rs. Billion 22.25
• SUBSIDY Rs. Billion 2.40
• TOTAL CLAIMS Rs. Billion 64.71
• CLAIMS PAID Rs. Billion 58.95
• CLAIMS PAYABLE Rs. Billion 5.76
• FARMERS BENEFITTED Millions 19.74
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Weather Based Crop Insurance Scheme (Pilot 2007)
• Trigger: moisture/water requirement of Crop to produce a standard yield ( Groundnut )
Trigger Stages for Rainfall deficiency1. Sowing & Germination : 2. Vegetative phase: 3. Flowering & Pegging: 4. Pod formation & Maturity:
Trigger Stages for Excess Rainfall1. Flowering and Pegging 2. Pod Formation and Maturity:
• Total Sum Insured Rs 15,000 per hectare• Premium capped at Rs 525 per hectare• Commercial and capped premium difference subsidized• Automatic Weather Stations to measure rainfall
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Weather Based Crop Insurance Scheme (Pilot 2007)
Trigger for Rainfall Deficiency (Pilot Karnataka, District Haveri, Crop Ground Nut) SL CROP STAGE CALENDAR
PERIOD TRIGGER
(mm) EXIT (mm)
PAY-OUT
(Rs./mm)
MAX. PAY OUT
1 Sowing & Germination
(21 days)
10th – 30th June
30 mm over any 3 consecutive
days
10 mm
Rs. 100 per mm
Rs. 2000
2 Vegetative phase (31 days)
1st – 15th July 16th – 31st July
25 25
5 5
Rs. 125 Rs. 125
Rs. 2500
3 Flowering & Pegging (31 days)
1st – 15th Aug 16th – 31st Aug
40 40
10 15
Rs. 100 Rs. 120
Rs. 3000
4 Pod Formation & Maturity (45 days)
1st Sept – 15th Oct
80
30 Rs.70 Rs. 3500
