Tuesday October 22, 2019
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New Crop Insurance Scheme will go a long way in addressing farmers’ issues

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By Nirendra Dev

Agriculture being the mainstay of Indian people traditionally and culturally, it is refreshing that the Narendra Modi government has been focusing on the agriculture front quite seriously. Therefore the announcement of the New Crop Insurance scheme on 13th January, 2016 by the Government of India has received applause from all quarters.

The government and the policy makers have always faced a few challenges vis-à-vis the task of ensuring food security, higher agri growth and adequate jobs in agri sector. There has been a long felt need to bring together in one place all conceptual issues, detailed institutional framework and operational details related to farmers’ welfare, risk management of farming community and the crops during drought and floods, and other localized risk factors.

The broad policy on drought and natural disaster management prepared by the government has prescribed multifold actions vis-à-vis the disaster mitigation plans, relief measures required for providing succor to the affected population, and the need to integrate these with long term objectives.

In other words, steps were required to be taken on a war footing with a well thought of and far-sighted vision and action plans, both in short term and long terms.

The New Crop Insurance scheme must be understood from that perspective. This is all the more relevant at a time when the country is facing drought for the second straight year due to poor monsoon rains.

Under the new scheme that would cost the government Rs 8,000-9,000 crore annually, the farmers’ premium has been kept at a maximum of 2 per cent for food grains and oilseeds, and up to 5 per cent for horticulture and cotton crops.

To be rolled out from the Kharif season this year, the much awaited scheme – Pradhan Mantri Fasal Bima Yojana – was cleared at the Cabinet meeting, headed by the Prime Minister Narendra Modi.

The new scheme, to be executed also by private insurance companies, is seen as a significant step by policy makers, farming community, and experts. The government’s move will enhance insurance coverage to more crop area to protect farmers from the vagaries of monsoon. Hence the scheme is considered very timely and also quite in tune with similar initiatives in some countries.

For Rabi crops, the farmer’s share has been rightly fixed at 1.5 per cent — against actual premiums of 8-10 per cent. For year-long cash crops and horticultural crops, this has been capped at 5 per cent.

The PMFBY will replace the existing two schemes National Agricultural Insurance Scheme (NAIS) as well as the Modified NAIS.

The official sources also clarified that in terms of Service Tax, as the new PMFBY is a replacement scheme of  NAIS / MNAIS, there will be exemption from Service Tax liability of all the services involved in the implementation of the scheme. It is estimated that the new scheme will ensure about 75-80 percent of subsidy for the farmers in insurance premium.

It is worth mentioning that the government is already shelling out around Rs 5000 crore annually average for the last five years for various disaster relief measures even as the government’s new move will now mean a tentative expenditure of about Rs 9000 crore. This will be more helpful, especially for farmers as the risk factor would be looked into. According to many, the ‘Pradhan Mantri Fasal BimaYojna’ will also rid farmers of the web of complex rules of the earlier insurance schemes.

The new scheme includes successful aspects of the existing schemes and “effectively addresses” whatever was lacking in earlier schemes.”The scheme has the lowest premium, it entails easy usage of technology like mobile phone, quick assessment of damage and disbursement within a time frame,” the PM said.

The government would have to cough out Rs 8,800 crore annually, whereas the coverage would be for a crop area of 194.40 million hectare. It is significant to note that after coming to power in May 2014, the Modi government had announced that it would bring a new crop insurance scheme.

Among others, expressing confidence that farmers will adopt this new scheme, the union Home Minister Rajnath Singh said it will help them tide over financial uncertainties.

Experts also say that the mechanism of higher subsidy for crop premiums is not out of line with international standards. The United States, for instance, covers over 120 million hectares and gives subsidy to the tune of around 70 per cent. China insures its farmers for a sown area of around 75 million hectares with a subsidy on premiums of about 80 per cent. In Indian context, during the next five years, the plan would probably cover over 50 per cent of the cropped area.

A Game-changer: There are a few significant features about the new scheme and this will make it both – farmers’ friendly and a game-changer in the long run. The new Crop Insurance Scheme is in line with ‘One Nation – One Scheme’ theme. “It incorporates the best features of all previous schemes and at the same time, all previous shortcomings/weaknesses have been removed,” an official announcement said and thus highlighting the end of the cob of complexities the farmers had to face earlier.

Importantly for the beneficiaries, risks leading to crop loss are to be covered under the scheme include: Yield Losses (standing crops, on notified area basis). Thus, a Comprehensive risk insurance is provided to cover yield losses due to non-preventable risks, such as Natural Fire and Lightning, Storm, Hailstorm, Cyclone, Typhoon, Tempest, Hurricane, Tornado. Risks due to Flood, Inundation and Landslide, Drought, Dry spells, Pests/ Diseases also will be covered.

Similarly, in cases where the 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 per cent of the sum-insured.

In post-harvest losses, coverage will be 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. For certain localized problems, Loss / damage resulting from the occurrence of identified localized risks like hailstorm, landslide, and Inundation affecting isolated farms in the notified area would also be covered.

Moreover, it has been made clear that there will be “no upper limit” on the Government subsidy. Even if balance premium is 90 per cent, it will be borne by the Government. Earlier, there was a provision of capping the premium rate, which resulted in low claims being paid to farmers. This capping was done to limit Government outgo on the premium subsidy. This ceiling has now been removed and farmers will get to claim against the full sum insured without any reduction.

The new scheme envisages among other things, that there will be the use of technology. More technology and science will be encouraged. Smart phones will be used to capture and upload data of crop cutting to reduce the delays in claim payment to farmers. Remote sensing will also be used to reduce the number of crop cutting experiments, sources say.

Making use of technology mandatory will also improve operational efficiency and will be beneficial to both – the farmers and the insurers, experts and insurance players say. Additionally, since farmer’s premium will be down, the uptake of policies would be high. Moreover, making the new crop insurance scheme mandatory for states will also mean that there will be increase in the list of policy takers. Adding catastrophic events also to this cover to protect farmers against crop loss/damage due to incidents like cyclone would be beneficial to all stakeholders yet again. (PIB)

Nirendra Dev is a Delhi based journalist

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Research: Having Diverse Natural Areas Near Agriculture Helps Farmers Financially During Calamities

"New global and local policy should specifically target conserving and enhancing biodiversity"

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farmers, nature
University of British Columbia ecologist Diane Srivastava, with a damselfly, an insect often used as an indicator species for estimating biodiversity and assessing ecosystem health. (T. Zulkoskey). VOA

Farmers reap surprising benefits from having areas that are biodiverse  with many plant and animal species nearby, according to new research. A study finds that having diverse natural areas near agriculture helps farmers financially during droughts, and the more diverse the areas are, the better. Policies that preserve biodiversity near farms may ease economic pressure in places with severe droughts, the authors say.

“If you plant the same sort of crops next to a natural area that is very high in biodiversity versus one that’s very low in biodiversity, [the positive effect] spills over into the agricultural products,” said Frederik Noack, a professor of food and resource economics at the University of British Columbia who led the study.

Some of that spillover can be tied to the increased diversity of insects in places that host many different species of plants, experts say. Pollinators that help plants reproduce, like bees and moths, and spiders that prey on agricultural pests like aphids and beetles are especially important.

Noack hoped to learn if having biodiverse areas close to farms could help crops be more resistant to drought  and if that impact would be big enough to be seen in farmers’ incomes.

farmers, diversity, agriculture
Farmers reap surprising benefits from having areas that are biodiverse with many plant and animal species nearby, according to new research. Wikimedia Commons

Big data from small farms

The researchers used data from 7,556 households in 304 villages in Asia, Africa and Latin America, where farmers derive their incomes from traditional agriculture as well as forest products like lumber and firewood.

Noack and his research team looked for a connection between the level of natural biodiversity  in this case, the number of plant species in the area  and how strongly drought affected the incomes of local farmers.

The researchers had expected that greater local biodiversity would benefit farmers, and it did. Farmers in areas with half the biodiversity lost twice as much income when droughts hit during the growing season.

Noack said that initially they thought the effect was just correlated with crop diversity. “Maybe you plant more different crops in areas with higher natural biodiversity because maybe there are just more crops available in those areas and that’s actually what’s driving the effect.”

But that’s not what they found. Even when they accounted for the effect of greater crop diversity, the farmers’ incomes seemed to be stabilized just by being close to diverse natural areas that can host many types of pollinators.

farmers, agriculture, diverse
“If you plant the same sort of crops next to a natural area that is very high in biodiversity versus one that’s very low in biodiversity, [the positive effect] spills over into the agricultural products,” said Frederik Noack. Pixabay
Having access to forests was also an income stabilizer. Because forests are the result of many years of growth rather than just a single season, income from forest products is less susceptible to drought and can offset agricultural losses, the researchers found.

ALSO READ: Government to Launch Solar Scheme for Farmers to Ensure Rs. 1 Lakh Income

Encouraging conservation

Bruno Basso, an ecosystems scientist at Michigan State University who was not involved in the research, commented in an email that the researchers had been able to show that “biodiversity and forest conservation play a critical role in adapting and mitigating the negative effects of increased climate variability.” Noack hopes that this study can become part of the larger debate about conservation of natural areas.

“Should we just have protected area far away in areas that we don’t use or shall we try to integrate that into normal land use?” said Noack. “This study actually says maybe we should at least have some level of biodiversity conservation in the agricultural landscape because of this positive spillover.” Basso agreed. “New global and local policy should specifically target conserving and enhancing biodiversity,” he said. (VOA)