Crop Insurance: Helping Hand For Farmers

Education News | Jul-07-2021

Crop Insurance: Helping Hand For Farmers

Crop insurance is a type of policy that covers farmers against unforeseen losses of crop yield or profit on the market. Cultivation insurance has two categories: crop yield and crop income. Crop yield insurance safeguards anticipated revenues because of unforeseen yields, i.e., crop harvest volume. Crop income insurance covers expected loss revenues due to fluctuations in market prices of crops. Both insurance types are a tool to help producers recover because of unexpected events in disasters. Crop insurance is purchased by farmers to protect them against either the loss of their crop by natural disasters, such as hail, drought, and floods, or loss of revenue as a result of decreases in farm commodities prices by federal governments. Both categories of crop insurance are referred to as crop income insurance and crop income insurance. On average, 62 percent of the premium is supported by the federal government. Crop insurance covered nearly 380 million acres in 2019. In most counties where they are grown, major crops are insurable and approximately 90% of the US crop acreage is insured under the federal crop's insurance scheme.

Crop insurance requirements: Every year, natural calamities affect one part of India or other food crops, 'Crop yield instabilities are the ordinary state and farmers' fortunes continue to be exposed to agriculture is practically the same as in the past. Good years and bad years are indeed expected, with wet weather, drought and flux and frost, low yields, and mixed succession plants. Total losses due to natural disasters (such as floods, drought, and plant diseases) are estimated at an annual rate of Rs. 1,000 crores. The man behind the plow must rest assured that such losses in crops will be compensated. But the main cause of the crisis lies in a key feature of agriculture. It is an economy that requires a substantial portion of costs, without any certainty of results. Factors that are largely beyond farmers' control such as weather patterns and the determined price situation as a global supply-demand and exchange rate affect the quantity and quality of production. In contrast to all other economic activities, over time, agriculture will not stabilize. A farmer is exposed to the same endemic risks each cycle even after decades.

What are the problems facing farmers?

Most private companies have no local office. Insurers are private. This makes it hard for farmers to reach them, and it mainly takes their loans from the banks. Most insured farmers do not know to whom their losses can be reported. They have no information about the insurance policy, the crop, or the coverage level (sum insured). Private insurers' helplines don't work most of the time; customer managers rarely follow the farmers' local language. Cases, where a private bank sold a Telangana farmer's mortgaging insurance, have also been reported
The need to ensure crops in developing countries, natural disasters mainly affect poor farmers. And crop insurance protects farmers against crop losses due to natural disasters, extreme weather, or income loss caused by price fluctuations in the agricultural market. This guarantees a man who is fighting with his plow that at least after a disaster he will be brought back.

Crop insurance benefits

1. Stability of revenues: It protects farmers from losses as a result of crop failure. It is a type of resource which helps farmers manage their returns and price risks.

2. Minimal debts: Farmers will be able to repay their loans through crop insurance even during crop failure.

3. Technological progress: insurance companies also provide insurance companies with information about how losses can be minimized to help farmers. And IoT can also be used in the development of technology.

A crop insurance scheme (NAIS) was established in India, which is known as multi-pronged crops. Agriculture Insurance Company of India, an Indian state-owned company, is implementing this scheme. The scheme is binding on all farmers who receive farm loans from any financial institution. For all other farmers, it is voluntary. The subsidy is granted to farmers that have less than two hectares of land. This insurance is in the field. This means that a particular area is insured instead of individual farmers. The area can vary from gram panchayat or block or district from crop to crop, or state to state. It may be an administrative unit of 8-10 villages. Pradhan Mantri Fasal Bima Yojana (PMFBY) aims to provide cover for agricultural losses due to crop yield reduction estimated by the local authorities. The system also covers losses in advance of sowing, losses following harvest from cyclonic precipitation, and losses caused by seasonal precipitation in India. In addition to the previously covered hailstorms and terrestrial risks, losses due to localized calamities such as flooding are covered.

By: Hitanshi Arora