Agriculture Insurance and Product Development/ Piloting yield Risk Management Mechanism

Agriculture as an economic activity is severely affected by various factors which are beyond the control of the farmers. The scanty, untimely, inadequate or heavy rains, sudden changes in weather conditions, hailstorms, frosts and fogs, sudden epidemics of diseases and pests etc. make agriculture a very unsafe and unsure activity. The lack of infrastructure for post harvest handling and loopholes in Agriculture Marketing System adds to the uncertainties in Agricultural business. Thus risk in Agriculture is a very complicated and complex phenomena, manifested b y uncertain productivity and inadequate price realized by the farmers for their agricultural produce. This problem needs to be addressed, to insulate the farming community to the extent possible. The National Agriculture Insurance Scheme, popularly known as Crop Insurance Scheme, does not cover horticultural crops. Maharashtra's strength in horticulture needs no emphasis. Therefore, there is an absolute necessity to develop insurance products for horticulture crops, acceptable to farmers, which are not available at present. Besides horticultural crops insurance products acceptable for non-perishable crops by the farmers need to be developed.
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Agriculture as an economic activity is severely affected by various factors which are beyond the control of the farmers. The scanty, untimely, inadequate or heavy rains, sudden changes in weather conditions, hailstorms, frosts and fogs, sudden epidemics of diseases and pests etc. make agriculture a very unsafe and unsure activity. The lack of infrastructure for post harvest handling and loopholes in Agriculture Marketing System adds to the uncertainties in Agricultural business. Thus risk in Agriculture is a very complicated and complex phenomena, manifested b y uncertain productivity and inadequate price realized by the farmers for their agricultural produce. This problem needs to be addressed, to insulate the farming community to the extent possible. The National Agriculture Insurance Scheme, popularly known as Crop Insurance Scheme, does not cover horticultural crops. Maharashtra's strength in horticulture needs no emphasis. Therefore, there is an absolute necessity to develop insurance products for horticulture crops, acceptable to farmers, which are not available at present. Besides horticultural crops insurance products acceptable for non-perishable crops by the farmers need to be developed.

It is proposed to study the agriculture insurance with particular reference to the horticultural crops and few non perishable crops. Study of the present status of data about yield of crops identified and collection of more comprehensive  data to fill up the gaps, develop new methodologies for data collection, organization and dissemination of the data that align with the needs of insurance companies to develop insurance products based on Crop Cutting Experiments (CCE) and assist the Department of Agriculture to maintain database for such CCE based crop insurance. Study of existing weather data, identify the gaps in the same and collect required weather data to fill up the gaps and develop linkages between weather parameters and yield of crops for weather data based crop insurance. This study and product development will be done during first 24 months of the project to develop a more perfect and matured CCE based insurance product and weather data based insurance product for the identified crops.

The study could include what the farmers want as an insurance product to cover their crops. Different products available in the market will be studied and the expectations of the farmers, officials who implement the scheme, Govt. who shares the responsibility of premium & compensation, and, the insurance company would be examined. The products which are acceptable to all the players can be identified and road map of product development can be drawn. These studies would include two sets of crops i.e. perishables (fruits and vegetables) and non-perishables i.e. cereals, pulses and oilseeds.

This study will be conducted during early 2 years of the project period through an independent consultant who will be recruited by competitive bidding. ToR for the consultant will be prepared by ABPF with the support of PCU and ABPF. They will take technical and oversight role on this. Contracting of the consultant will be done by PCU. On the basis of the results of the study the World Bank in consultation with GoM at the time of MTR will decide whether the testing of the products, its launching, the rolling out of the program can be considered under MACP, and, with what support during the remaining period of the Project.


 
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