Lecture 4 Module IV Risk ManagemIent Through Agricultural Insurance

COURSE AE-A-10
TITLE: AGRICULTURAL RISK MANAGEMENT AND INSURANCE

MSc (Agribusiness Economics)
Batch 2022 – 2024
Final Semester (Jan ‘24– Apr ’24)
Course by
Dr Raosaheb Mohite
Visiting Faculty – Agri Value Chains
Gokhale Institute of Political Science and Economics (GIPE)

Deccan Gymkhana, Pune 411 001, MH State, India
FEB 2024 RM/RIA&I/AE-A-10/GIPE/M-4 1
Lecture
Module IV
Risk Management Through Agricultural
Insurance

4. RISK MANAGEMENT THRU AGRI INSURANCE
• What is Agricultural Insurance…..…..

• Chronology of Agriculture Insurance
in India
• Pradhan Mantri Fasal Bima Yojana…
(PMFBY)
• Case studies…………………………………..
• Benefits of Agriculture Insurance…..
• Government Role……………………….....
• Assessment of PMFBY Farmers……..,
suicides
Agricultural Insurance
• Insurance is a financial
arrangement whereby losses
suffered by a few are met from
the funds accumulated
through small contributions
made by many who are
exposed to similar risks.
• Agricultural insurance is a key
risk mitigation tool in farming
http://employmentnews.gov.in/newemp/MoreContentNew.aspx?n=Editorial&k=52

Importance of Agricultural Insurance
• Agricultural Insurance provides 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 and diseases
• Encourages the farmers to adopt progressive farming practices,
high value in-puts and higher technology in Agriculture.
• Assures the farmer and his family guaranteed partial or full cover
of losses in case of calamities that lead to crop failure, and, aids in
efforts to increase the use of best agriculture practices.
Source: https://forumias.com/portal/what-is-the-importance-of-agricultural--insurance-discuss-
reasons-for-its-low-penetration
Stakeholder Perspectives of Agriculture
Insurance
• Farmer's perspective
• Helps take necessary risks, afford loans and keep away
from debt traps (and related distress and suicides)
• Government Perspective
• Insurance increases the confidence on the government.
• It allows them to make necessary intervention.
• In turn it makes sure that the farmers do not suffer due to
natural calamities and sudden disasters.

Stakeholder Perspectives of Agriculture
Insurance
• Market perspective
• An insured farmer can make arrangements for next crop season
even in case of crop failure.
• It’s important in bringing stability in food market and manage
inflation in food prices.
• National Perspective:
• Agriculture Insurance guarantees income.
• This encourages investment by farmers in allied activities like
fishery/ dairy and also in non-agricultural activities.
• This results in increase in personal income of the farmer and in turn
the overall growth in national GDP
Concerns: Low Penetration of
Agri Insurance In India
1. Poor Penetration of Banking system in the rural
areas.
2. Fiscal Illiteracy among generally less educated
farmers, which in turn results in their lack of basic
understanding of credit mechanism
Insurance penetration in India as a whole was 3.4% as on 2015,

as against the world average of 6.2%.

Concerns: Low Penetration of
. Agri Insurance In India
3. Insufficient Institutional Support at rural level
4. Issues Related to Insurance Products which may
include among others:
a. Insufficient Risk coverage
b. Delayed and Inaccurate claim assessment and
Leakages.
5. Less than easy access to insurance by increased
technology support
Challenges: Farmers and Insurers
• Farmers
• Guaranteed yields that do not reflect farmer aspirations
• Low indemnity levels
• Inadequate loss coverage
• No or little coverage for horticultural crops,
• Delays in claim settlement
• Poor servicing and awareness levels - especially amongst
non-loanee farmers.
Challenges: Farmers and Insurers
• Insurers
• Large insurance unit sizes
• High premium to claims ratios
• High costs of distribution
• Adverse selection - particularly amongst non-loanee
farmers

Chronology: Agricultural Insurance
Schemes
• Comprehensive Crop Insurance Scheme (CCIS)
• started in 1985
• the objective was to provide financial support to the farmers in the
event of crop failure due to drought, flood etc.
• Since inception of the scheme in 1985, about 5.82 crore farmers
were covered upto Rabi 1996- 97 season.
• National Agricultural Insurance Scheme (NAIS)
• replaced CCIS from 1999-2000 onwards
• Modified National Agricultural Insurance Scheme (MNAIS)
• replaced NAIS in 2010.
• Pradhan Mantri Fasal Bima Yojana (PMFBY)
• replaced MNAIS in 2016.
Weather-Based Crop Insurance Scheme
• The Weather-Based Crop Insurance Scheme (WBCIS)
introduced in 2007–2008 included a weather index, which
covered losses due to unexpected weather, i.e., high or low
temperatures, excess or deficit rainfall.
• The scheme was based on the “area approach”, and the
premium rates were high, i.e., 8–10 percent for food crops
and oilseeds and 12 percent for commercial crops, and was
shared equally by the central and state governments.
• Participation in the scheme was compulsory for loanees and
voluntary for non-loanee farmers.
Weather-Based Crop Insurance Scheme
• The scheme continued up until 2016. A total of 720.2 lakh
farmers over an area of 886.62 lakh hectares were insured for
a sum amounting to Rs. 122,941.03 crore from 2007–2008 to
2015–2016.
• The gross premium was Rs. 12,161.4 crore, while claims
amounted to Rs. 9665.47 crore.
• A total of 511.04 lakh farmers benefited from this scheme.

Restructured Weather-Based Crop
Insurance Scheme
• On 18 February 2016, the Weather-Based Crop Insurance Scheme was
renamed the Restructured Weather-Based Crop Insurance Scheme
(RWBCIS) to provide monetary support to farmers against crop loss to
natural calamities.
• The scheme was based on the weather-index-based area approach.
The insurance scheme covers cereals, millets, pulses, oilseeds, annual
husbandry, horticultural, and commercial crops. This insurance scheme
covered all farmers, including sharecroppers and tenants. Participation
was compulsory for loanee farmers and voluntary for non-loanee
farmers.
• The scheme covered risks from the pre-sowing period to the majority
period.

Restructured Weather-Based Crop
Insurance Scheme
• The premium rate ranged from 2.0 percent for kharif crops to 1.5
percent for rabi crops and 5.0 percent for horticultural and commercial
crops.
• A total of 62.48 farmers insured, out of which 43.96 lakh farmers were
insured during kharif, 18.51 lakh farmers were insured under the rabi
season over an area of 57.47 lakh hectares during 2016–2017 to
2018–2019.
• The sum insured was Rs. 38,770.72 crores during 2016–2017 to 2018–
2019. The gross premium collected was Rs. 6886.56 crores, with
claims amounted to Rs. 6186.32 crore during 2016–2017 to 2018–
2019. Over 47.05 lakh farmers benefited from this scheme during
2016–17 to 2018–19
Prime Minister Fasal Beema Yojana
- PMFBY
• Currently in place, the PMFBY is a significant improvement
over the earlier agricultural insurance scheme.
• Launched on 18 February, 2016, the PMFBY is a government
sponsored crop insurance scheme that integrates multiple
stakeholders on a single platform.
• The main objective is to protect the farmer against crop
losses
• It covers losses suffered due to natural calamities such as
drought, flood, hailstorm, cyclone, fire, pests and diseases.

Objectives: PMFBY
• PMFBY aims at supporting sustainable production by
way of
• providing financial support to farmers suffering crop loss/
damage arising out of unforeseen events
• encouraging farmers to adopt innovative and modern
agricultural practices
• ensuring flow of credit to the agriculture sector
• stabilizing the income of farmers to ensure their
continuance in farming

Overall Effect Of PMFBY
• Even though the major objective of the PMFBY is to
protect farmers from production risks, its overall effect
is to contribute to
• Food security,
• Crop diversification
• Enhancing growth in agriculture and
• Improving competitiveness of agriculture sector

• Agriculture remains the primary sector of the Indian economy. While it
accounts for merely 16 percent of the country’s GDP, approximately 43.9
percent of the population depends on it for their livelihood.
• In recent years, indebtedness, crop failures, non-remunerative prices and poor
returns have led to agrarian distress in many parts of the country.
• The government has come up with various mechanisms to address these issues:
insurance, direct transfers and loan waivers, among them.
• However, these mechanisms are ad hoc, poorly implemented and hobbled by
political dissension.
• In February 2016 the government launched the crop insurance scheme,
Pradhan Mantri Fasal Bima Yojana (PMFBY) to reverse the risk-averse nature of
farmers. While the PMFBY has improved upon its predecessors, it faces
structural, logistical and financial obstacles.
- Paper makes an assessment of the performance of the PMFBY in terms of adaptability and the achievement of the objective of “one nation, one scheme.”
– Source: Ruchbah Rai, 2019. ‘Pradhan Mantri Fasal Bima Yojana: An Assessment of India’s Crop Insurance Scheme’

Comparison of Crop Insurance Schemes In India
Feature NAIS (1999) MNAIS (2010) PMFBY (2016)
Premium rate Low High (9-15%) Low (Govt. contributes 5X of farmer)
One season-one premium Yes No Yes
Insurance amount covered Full Capped Full
On account payment No Yes Yes
Localized risk coverage No Hailstorm, Landslide Hailstorm, Landslide, inundation
Post-harvest losses coverage No Coastal areas All India
Preventing sowing coverage No Yes Yes
Use of technology No Intended Mandatory
Awareness No No Yes (target to double the coverage)
Insurance companies Only Govt. Govt & Pvt co. Govt. & Pvt. Co.
Source: Ruchbah Rai, “Pradhan Mantri Fasal Bima Yojana: An Assessment of India’s Crop Insurance Scheme”,
ORF Issue Brief No. 296, May 2019, Observer Research Foundation
Risk Coverage and Exclusions - PMFBY
1.0. FOLLOWING RISKS LEADING TO CROP LOSS ARE COVERED UNDER THE PMFBY SCHEME
1.1. YIELD LOSSES (standing crops, on notified area basis): Comprehensive risk insurance is provided to cover yield
losses due to non-preventable risks, such as (i) Natural Fire and Lightning (ii) Storm, Hailstorm, Cyclone,
Typhoon, Tornado, Tempest, Hurricane etc. (iii) Flood, Inundation and Landslide (iv) Drought, Dry spells (v)
Pests/ Diseases etc
1.2. PREVENTED SOWING (on notified area basis): In cases where majority of the insured farmers of a notified
area, having intent to sow/plant and incurred expenditure for the purpose, are prevented from
sowing/planting the insured crop due to adverse weather conditions, shall be eligible for indemnity claims
up to a maximum of 25% of the sum-insured
1.3. POST-HARVEST LOSSES (individual farm basis): Coverage is available up to a maximum period of 14 days from
harvesting for those crops which are kept in “cut & spread” condition to dry in the field after harvesting,
against specific perils of cyclone / cyclonic rains, unseasonal rains throughout the country.
1.4. LOCALISED CALAMITIES (individual farm basis): Loss/ damage resulting from occurrence of identified localized
risks i.e. hailstorm, landslide, and Inundation affecting isolated farms in the notified area.
2.0. EXCLUSIONS of Risks and Losses arising out of following perils:
• War & kindred perils, nuclear risks, riots, malicious damage, theft, act of enmity, grazed and/ or destroyed
by domestic and/or wild animals.
• In case of Post–Harvest losses the harvested crop bundled and heaped at a place before threshing, other
preventable risks.
Crops & Insurance Charges Under PMFBY
(Payable By Farmers)
No Season Crops covered Max. Charge (as % of sum insured)
1 Kharif All food grain and Oilseeds 2.0% of Sum Insured
crops(all Cereals, Millets, or
Pulses and Oilseeds crops) Actuarial rate, whichever is less
2 Rabi All food grain and Oilseeds 1.5% of Sum Insured
crops(all Cereals, Millets, or
Pulses and Oilseeds crops) Actuarial rate, whichever is less
3 Kharif & Annual Commercial/ Annual 5% of Sum Insured
Rabi Horticultural crops or
Actuarial rate, whichever is less
Coverage Limit Under PMFBY
• Sum insured per hectare for both loanee and non-loanee
farmers
• will be same and equal to the scale of finance as decided by
the District Level Technical Committee, pre-declared by SLCCCI
and notified.
• No other calculation of scale of finance will be applicable.
• Sum Insured for individual farmer
• is equal to the scale of finance per hectare multiplied by area of the
notified crop proposed by the farmer for insurance.
• Sum insured for irrigated and un-irrigated areas may be
separate
‘Area under cultivation’ shall always be expressed in ‘hectare’.

Highlights & Main Features of PMFBY
• Unit area of insurance: • On-account payment:
• reduced to village/village panchayat • upto 25% of likely claims as
level for major crops immediate relief
• Threshold yield: • Uniform seasonality:
• based on average yield of the best 5 • disciplines both for loanee & non-
years out of preceding 7 years loanee farmers
• Indemnity payment: • Farmer's premium:
• for prevented sowing/planting risk • lowered for Food crops and oilseeds
during Kharif to 2%, during Rabi to
• Coverage of Post-harvest losses: 1.5% and
• up to 14 days of harvest, due to • 5% for Annual Commercial/
hailstorm, cyclone, cyclonic rains and Horticultural crops during both
unseasonal rains. seasons.
Ref: https://www.aicofindia.com/AICEng/Pages/PMFBY-FAQs.aspx
Companies Offering Crop Insurance
PMFBY
1. Agriculture Insurance Company (AIC)
2. Cholamandalam MS General Insurance Company
3. Reliance General Insurance Co. Ltd.
4. Future Generali India Insurance Co. Ltd.
5. HDFC ERGO General Insurance Co. Ltd.
6. Bajaj Allianz

Companies Offering Crop Insurance
PMFBY
7. IFFCO Tokio General Insurance Co. Ltd.
8. Universal Sompo General Insurance Company
9. ICICI Lombard General Insurance Co. Ltd.
10.Tata AIG General Insurance Co. Ltd.
11.SBI General Insurance
12.United India Insurance Co.

“We Got Big Profit on Small Premium”
- Nanheraja Virendra Singh Gurjar
• Nanheraja Virendra Singh Gurjar from the Gohna village of Datia, from
Madhya Pradesh, had insured his black gram crop under PMFBY.
• He had paid a premium of INR 14000 and received a compensation of
INR 82152.29 as Mid-Season Adversity and a total of INR 1,87452.05,
at the end.
• A major portion of the relief amount helped him in the timely land
preparation, buying, transportation & application of farmyard manure.
• He also managed to repay a part of a loan he had borrowed at high
interest rate.
• Rest of the amount helped in securing his daughters future.
https://www.manage.gov.in/publications/resArticles/bhaskar/Prime%20Minister%E2%80%99s%20Fasal%20Bima
%20Yojana%20(PMFBY)%20A%20Case%20of.pdf
“Fear Of Grain Loss Is A Thing Of The Past For Me”
- Savitri Singh
• Savitri Singh, from Datia, Madhya Pradesh, is a women farmer who had
insured under the PMFBY.
• She says ‘This insurance is very important to us because farmers are
distressed due to erratic weather and fluctuating prices, now I can
peacefully sleep at night knowing that if any untoward incident occurs,
I will be able to get compensation within a short span of one month
because everything is computer-connected and we believe in our
district administration,”
• Moreover, the compensation amount will directly be transferred to her
bank account as per scheme guidelines.
https://www.manage.gov.in/publications/resArticles/bhaskar/Prime%20Minister%E2%80%99s%20
Fasal%20Bima%20Yojana%20(PMFBY)%20A%20Case%20of.pdf
“Insurance Pulled Me out of the Pit of Despair”
- Shrinivas Sharma
• Shrinivas Sharma a farmer from Semai village of Datia district,
Madhya Pradesh.
• He says that “PMFBY insurance scheme helped me to get out of
the pit of despair”- for sesame and black gram crops.
• Further he says, that the crop insurance scheme is like “an oasis
in the desert” – and he no longer have to beg from the money
lenders for money – who fleece all the time, more so during the
adversity period.
• Now that he is free of them, he can focus on his work.
• The word insurance has a new meaning for him.
https://www.manage.gov.in/publications/resArticles/bhaskar/Prime%20Minister%E2%80%99s%20Fasal%20Bi
ma%20Yojana%20(PMFBY)%20A%20Case%20of.pdf
Need for Insurance by Poor Farmers
• Uncertainty of crop yield is a basic risk faced by farmer in all
the countries (developed/ underdeveloped/ developing).
• These risks are particularly high in developing countries,
particularly in the countries in tropics, where majority of the
farmers are i) poor, ii) have extremely limited means and
resources.
• Their appetite for risk is considered quite low and they
cannot bear the risks of crop failure of a disastrous nature.

Need for Insurance by Poor Farmers
• On the other hand, it is very much possible that much of the
uncertainty of crop production could be removed
i) By technical measures and
ii) by improvements in the social and institutional set-up.
• In-spite of removing much of the uncertainties in agriculture, a

good deal of uncertainty will always exist.
• In other words, no imaginable measure/s can make crop
production completely independent of natural factors or risk
free

Cost-benefit Ratio of Agricultural Insurance
• The physical measures envisioned may not be justified by
their cost-benefit ratio.
• For instance, there may be many places where flood is preventable,
but the cost could be far out of proportion to their benefit.
• Under the circumstances, it would be a bad idea to spend more
capital than would be lost by the risk itself
• Especially where capital is so scarce.

Availing of Credit to Agriculture
The provision of credit to agriculture differs from most other
business lending.
Notably the cash inflows in many agricultural operations is
1. Seasonal in nature
2. Cash inflows may take place only a few times (and often, only
once) in any given year.
On the other hand, the cash outflows in many non-agricultural
operations generally occur throughout the year
Availing of Credit to Agriculture
Many assets in agriculture also require large initial outlays that
are expected to yield benefits over many years.
For instance, the need for intermediate-term financing/ term
loan for breeding livestock, machinery, and buildings etc is
often high, whose benefits are realized only after several years
of gestation.
The fact that the cash inflows often occur only sporadically,
within a given year, in such an instance, a crop failure can mean
an immediate risk of default
Governments Intervene in Agricultural Insurance
• Agricultural production operation might be profitable over
the long run, but extreme weather or low market prices in a
single year can cause credit default.
• In other words, agricultural production often represents a
high ‘short-term credit risk’ because of the combination of
• high fixed costs,
• weather and disease variability, and
• variations in cash receipts.
Role of Government in Agricultural Insurance
• Government plays a role in providing agricultural insurance
and encouraging the high participation of farmers
• to reduce the need for ‘ad-hoc disaster programs’, which end up
being or which tend to be expensive, ineffective and inefficient.
• Government subsidizes both the premium amount by the
farmer and claims-end of the scheme of the Insurer
• to reduce the burden that are both significant or large and often
difficult to budget.

Role of Government in Agricultural Insurance
• As crop failure has serious repercussions, various
methods have been developed for helping farmers: to
compensate even partially for crop loss through natural
calamities. This may include support in following forms:
1. Reduction or suspension of land rent and taxes,
2. Cancellation of accumulated agricultural debts e.g.
• Rural & Agricultural Debt Relief Scheme, 1990, and
• Relief from the Calamity Relief Fund (CRF)
• National Calamity Contingency Fund (NCCF)

Crop Loss Relief Measures at the State Level
• The State level crop loss relief measures are also useful and
welcome, but ‘the farmers cannot expect them as a right’.
• The State level relief or prospects of relief, soften the blow or
hardship of the recipients, but are likely to be questioned by
the non-farming community. In this context, an important
relief measure that is largely free from the above difficulties,
is the Crop Insurance – that ensures protection against all
natural and unavoidable hazards.

Technology Low Farm Production
• Even though the adoption of modern technologies is
beneficial, it takes time to adopt and learn new technologies
and invites for infusion of substantial financial resources.
• In the absence of income levels that are guaranteed by crop
insurance, risky new technologies requiring higher levels of
institutional finance are seldom available or financed by
banks and less likely to be adopted by farmers.

INSURANCE INDICATORS
UNDER PMFBY
Source: Ruchbah Rai, “Pradhan Mantri Fasal Bima Yojana: An Assessment of India’s Crop Insurance
Scheme”, ORF Issue Brief No. 296, May 2019, Observer Research Foundation. Compilation from PMFBY site;
The author writes ‘the failure is a result of some fundamental issues in the scheme, which must be discussed to
create a more holistic crop-insurance scheme that mitigates risks for both farmers & food security’

• Compulsory Component
All farmers availing Seasonal
Agricultural Operation (SAO) loans
from Financial Institutions (i.e.
loanee farmers) for the notified
crop(s) would be covered
compulsorily.
• Voluntary Component
The Scheme would be optional for
the for farmers not eligible for loans
from banks (i.e., non-loanee
farmers).

Settlement Of Crop
Insurance Claims
By Farmers
https://economictimes.indiatimes.co
m/news/economy/agriculture/insur
ers-settle-farmers-rs-11899-crore-
claims-under-pmfby-for-2017-kharif-
season/articleshow/65259295.cms

How Does Insurance Work (case of Hemp)
https://hemp.cals.cornell.edu/resource/crop-insurance-and-hemp/
Hemp, or industrial hemp, is a botanical class of Cannabis sativa cultivars grown specifically for industrial or medicinal use. It can be
used to make a wide range of products. Along with bamboo, hemp is among the fastest growing plants on Earth. Wikipedia
Intimation
of loss. ...
Keep track
Submission
of regular
of claim. ...
updates.
Pradhan
Mantri Fasal
Bima Yojana
claim process Submission
Settlement of
of claim. ... documents.
Loss ...
assessment
procedure.
...

Prevented
Sowing/
Planting
Risk
Coverage Standing
Localized of Risks Crop
Calamities under (Sowing to
PMFBY Harvesting)
Post-
Harvest
Losses

Prevented Sowing/Planting Risk Standing Crop (Sowing to Harvesting)
A farmer is eligible for a cover Comprehensive risk insurance is

up to 25% of the SI (Sum provided to cover yield losses
Insured) on account of due to non-preventable risks,
prevented sowing/ planting due viz. Drought, Dry spell, Flood,
to deficit rainfall or adverse Inundation, widespread Pests
seasonal conditions and Disease attack, Landslides,
Fire due to natural causes
,Lightening, Storm, Hailstorm
and Cyclone.

Post-Harvest Losses Localized Calamities
(individual farm basis)
Coverage is available up to a Loss/damage to notified

maximum period of 14 days insured crops resulting from
from harvesting for those occurrence of identified
crops which are kept in “cut & localized risks of hailstorm,
spread” condition to dry in landslide, inundation,
the field after harvesting, cloudburst and natural fire
against specific perils of due to lightening affecting
cyclone /cyclonic rains, isolated farms in the notified
unseasonal rains throughout area
the country.

Insurance Premiums and Claims Paid
All figures in Rs Crores; PMFBY Site
Source: Ruchbah Rai, “Pradhan Mantri Fasal Bima Yojana: An Assessment of India’s Crop Insurance Scheme”, ORF
Issue Brief No. 296, May 2019, Observer Research Foundation

India's crop insurance program is the world's largest with 25
million farmers insured.
However, issues in design, particularly related to delays in

claims settlement, have led to 95 million farmer households
not being covered, despite significant government subsidy.
- World Bank
Improving Farmers' Access to Agricultural Insurance in India

Indemnity Level (IL) and Threshold Yield (TY)
a. Three levels of Indemnity or Indemnity levels(IL) of

70%, 80% and 90% corresponding to crop Risk in the
areas shall be available for all crops.
b. The Threshold Yield (TY) shall be the benchmark yield
level at which Insurance protection shall be given to all
the insured farmers in an Insurance Unit.
c. The TY for a crop in an Insurance Unit shall be based on
average yield of last seven years excluding two years of
declared calamity if any, multiplied by the level of
indemnity (IL) of the area
Threshold Yield (TY)
The Threshold Yield (TY) for a crop in an Insurance Unit shall be
based on average yield of last seven years excluding two years
of declared calamity if any, multiplied by the level of indemnity
of the area.

Claim Pay-Outs based on yield losses
Claim Pay-outs based on Yield losses shall be
calculated as per the following formula:

Enrolment of Farmers and Claim Settlement
under Pradhan Mantri Fasal Bima Yojana
• As per data available as on 30.11.2023, 435 lakh and 689 lakh
farmer applications have been enrolled under the scheme during
Rabi 2022-23 and Kharif 2023 seasons respectively.
(PS: The number of farmer applications has grown by 33.4%
and 41% year-on-year during 2022-23 and 2021-22, resp.)
• There is also a growth of 28.9% in farmers insured under the
scheme in Kharif 2023 season (upto 30th November, 2023) as
compared to Kharif 2022.
• Claims of Rs. 3,878 crore have been paid to 7.8 lakh farmer
applications for Rabi 2022-23 season
Posted On: 08 DEC 2023 5:17PM by PIB Delhi
Crop Insurance Survey*
1. A 2020 survey came out with the following findings:
a. With only around 5% insuring their crops and 87% of them not
receiving claims - crop insurance in India has failed.
b. Logit model estimates of correlates of adoption indicated that
households with larger family size, lower social group, less
education, lower standard of living and poor were more likely to
be left out of the ambit of crop insurance.
c. Further, propensity score estimates suggested that households
with access to crop insurance had significantly lesser outstanding
debt with positive effect on input costs and crop income.
*Source: Correlates and impact of crop insurance in India: evidence from a nationally representative survey, A.G. Adeeth Cariappa,
Darshnaben P. Mahida, Priyanka Lal, B.S. Chandel; Agricultural Finance Review: ISSN: 0002-1466: Publication date: 10 August 2020

The crop insurance model has failed to reduce the
3. Increasing
access to
burden of debt-repayment in the event of crop loss.
agricultural
credit
The govt. must address some fundamental flaws and
bring about policy changes to mobilise financial
resources for the agriculturally distressed
Effective crop In certain states, land lease laws must be changed to

insurance achieve larger participation in the programme.
system boosts
agricultural
productivity by Many male farmers are moving to urban areas for
better opportunities, leaving the women to take
2. Financing
inputs for 1. Cushioning
income losses
care of the farms.
agricultural for farmers
production
The insurance companies and regulators need to
improve efficacy of the crop insurance scheme, by
quick honouring of claims and seeing to it that the
benefits or profits trickle down to the farmers.
58
RM/RIA&I/AE-A-10/GIPE/M-4
As many as 154 farmers and daily-wage labourers die by
suicide in India daily, mainly due to “family problems”
and “illness”, said the latest National Crime Records
Bureau (NCRB) 2022 annual report. In 2021, the number
stood at 144.
A majority of farmer suicides was reported in

Maharashtra, followed by Karnataka, Andhra
Pradesh, Tamil Nadu and Madhya Pradesh.
(Source: Indian Express,5 Dec 2023)
https://indianexpress.com/article/cities/delhi/154-farmers-daily-wage-labourers-
suicide-india-ncrb-9054228/

Highest farmer suicides
Maharashtra saw the highest suicides of 4,248 farmers and
farm hands.
The state with the highest suicide numbers contributed to 38
per cent of all deaths by suicide cases of those involved in
agriculture.
The second-highest number of cases were recorded from
Karnataka (2,392), followed by Andhra Pradesh (917), Tamil
Nadu (728), and Madhya Pradesh (641).
https://www.downtoearth.org.in/news/agriculture/one-farmer-farm-labourer-
dies-by-suicide-every-hour-in-india-ncrb-data-93184

• Agriculture is the climate-
affected sector globally, with
40 per cent of countries
reporting economic losses
explicitly linked to it, according
to a new United Nations (UN)
analysis released on December
1, 2023.
• The study was released by
UN Food and Agriculture
Organization (FAO) on the
sidelines of the 28th
Conference of Parties (COP28)
to the United Nations
Framework Convention on
Climate Change (UNFCCC) in
Dubai, United Arab Emirates
(UAE).
Climate change has increased the frequency and
coverage of drought in India and research has established
a link between suicides among India’s agricultural
workforce and climate change-related disasters.
Farmer Suicides In 2020-2022, nearly two-thirds of the country was

drought-prone, according to the UN Convention to
and Combat Desertification.
Climate link
Meanwhile, a paper that came out in May 2023 had
found that farmer suicides have been consistently higher
in years with a rainfall deficit.
63 RM/RIA&I/AE-A-10/GIPE/M-4 FEB 2024

Maharashtra, Madhya Pradesh and Chhattisgarh
reported 62 per cent, 44 per cent and 76 per cent of
land as drought-prone respectively and also reported
high suicide rates among farmers.
Researchers Ritu Bharadwaj, N Karthikeyan and Ira

Deulgaonkar had examined year-on-year data from
Chhattisgarh, Karnataka, Madhya Pradesh,
Maharashtra and Telangana to understand the linkage.
Data covering 2014-15 to 2020-21 showed a negative

correlation for all five states — indicating that the
suicide rate is consistently higher in years with a
rainfall deficit.
64 RM/RIA&I/AE-A-10/GIPE/M-4 FEB 2024

Reducing food loss and waste sits at the heart of the food and
climate crises
- Lisa Moon, president and chief executive of The Global Food Banking Network
Further, food loss and
“One-third of all food that
waste is responsible for 8
is produced never gets to
to 10 per cent of global
people’s tables.
emissions.
Food banks around the With stronger policies and

world are a time-tested other incentives, food
solution by collecting banks can greatly increase
surplus food and delivering the amount of food that is
it to those who need it. recovered, helping feed
more people and reducing
https://www.downtoearth.org.in/news/agriculture/cop28-new-report-finds- waste and emissions,” said
agriculture-most-climate-affected-sector-calls-for-urgent-food-systems-focus-in-l-d- Moon.
fund-93115
“We have no money, moneylenders are not ready to wait. What should
we do? We can’t even afford to take onions to the market…….
You must provide the guaranteed price for the produce…
The finance guys threaten, and the patpedhi (cooperative society)

officers abuse. Who should we go for justice?… Today, I am forced to
commit suicide……..”
https://thewire.in/agriculture
Those were the words of Dashrath Lakshman Kedari before

he died by suicide last year in Pune district of Maharashtra.

FEB 2024
The half-sickle women of Maharashtra

67
When their farmer husbands take their own lives — up to 7,766 have from 2014 — wives become widows, but
must still clear debts, bring up children, and live with many layers of stigma
March 24, 2023 01:32 am | Updated March 25, 2023 01:00 pm IST
ABHINAY DESHPANDE
RM/RIA&I/AE-A-10/GIPE/M-4
https://www.thehindu.com/news/national/the-half-sickle-women-of-maharashtra/article66654750.ece
https://www.thehindu.com/news/national/watch-why-are-farmers-in-maharashtra-taking-their-own-lives/article66660383.ece
Farm Suicide
Rates State
Wise
FEB 2024
RM/RIA&I/AE-A-10/GIPE/M-4 68
Farm Suicide
Rates Region
wise
FEB 2024
RM/RIA&I/AE-A-10/GIPE/M-4 69
Reasons why farmers
are dying in India
Scholars have given
various reasons such as
• Monsoon failure,
• Climate change,
• High debt burdens,
• Government policies,
• Mental health,
• Personal issues and
• Family problems

End
rshbmohite@gmail.com

Lecture 4 Module IV Risk ManagemIent Through Agricultural Insurance

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COURSE AE-A-10

TITLE: AGRICULTURAL RISK MANAGEMENT AND INSURANCE

Gokhale Institute of Political Science and Economics (GIPE)

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• What is Agricultural Insurance…..…..

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Insurance penetration in India as a whole was 3.4% as on 2015,

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• In-spite of removing much of the uncertainties in agriculture, a

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A farmer is eligible for a cover Comprehensive risk insurance is

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Coverage is available up to a Loss/damage to notified

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All figures in Rs Crores; PMFBY Site

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However, issues in design, particularly related to delays in

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a. Three levels of Indemnity or Indemnity levels(IL) of

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Effective crop In certain states, land lease laws must be changed to

A majority of farmer suicides was reported in

FEB 2024 RM/RIA&I/AE-A-10/GIPE/M-4 60

FEB 2024 RM/RIA&I/AE-A-10/GIPE/M-4 61

Farmer Suicides In 2020-2022, nearly two-thirds of the country was

63 RM/RIA&I/AE-A-10/GIPE/M-4 FEB 2024

Researchers Ritu Bharadwaj, N Karthikeyan and Ira

Data covering 2014-15 to 2020-21 showed a negative

64 RM/RIA&I/AE-A-10/GIPE/M-4 FEB 2024

Food banks around the With stronger policies and

The finance guys threaten, and the patpedhi (cooperative society)

Those were the words of Dashrath Lakshman Kedari before

FEB 2024 RM/RIA&I/AE-A-10/GIPE/M-4 66

The half-sickle women of Maharashtra

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