Fundamental flaws in crop insurance scheme’s design makes it ineffective

Pradhan Mantri Fasal Bima Yojana (PMFBY), the flagship programme launched with much fanfare in 2016, has run into rough weather. With both the area covered and the number of enrolled farmers declining, the country’s premium crop insurance scheme is certainly in need of an overhaul.

Pradhan Mantri Fasal Bima Yojana (PMFBY), the flagship programme launched with much fanfare in 2016, has run into rough weather. With both the area covered and the number of enrolled farmers declining, the country’s premium crop insurance scheme is certainly in need of an overhaul

Challenges at present:

Insufficient reach and the issue of penetration.

With just around 45% of the claims made by farmers over the last three crop seasons data for the last rabi season is not available paid by the insurance companies.

The reason for the very low payout of claims is that only a few state governments are paying their share of the premiums on time and till they do, the central government doesn’t pay its share either. Till they get the premium, insurance companies simply sit on the claims.

There is hardly any use of modern technology in assessing crop damages. There is a lack of trained outsourced agencies, the scope of corruption during implementation and the non-utilisation of technologies like smartphones and drones to improve the reliability of such sampling

Less number of notified crops than can avail insurance, Inadequate and delayed claim payment.

High actuarial premium rates: Insurance companies charged high actuarial premium rates.

If states delay notifications, or payment of premiums, or crop cutting data, companies cannot pay compensation to the farmers in time.

There has been no concerted effort by the state government and insurance companies to build awareness of farmers on PMFBY. Insurance companies have failed to set-up infrastructure for proper Implementation of PMFBY.

PMBY is not beneficial for farmers in vulnerable regions as factors like low indemnity levels, low threshold yields, low sum insured and default on loans make it a poor scheme to safeguard against extreme weather events.

About PMFBY:

In April 2016, the government of India had launched Pradhan Mantri Fasal Bima Yojana (PMFBY) after rolling back the earlier insurance schemes viz. National Agriculture Insurance Scheme (NAIS), Weather-based Crop Insurance scheme and Modified National Agricultural Insurance Scheme (MNAIS).

It envisages a uniform premium of only 2% to be paid by farmers for Kharif crops, and 1.5% for Rabi crops. The premium for annual commercial and horticultural crops will be 5%.

The scheme is mandatory for farmers who have taken institutional loans from banks. It’s optional for farmers who have not taken institutional credit.

Objectives:

  • Providing financial support to farmers suffering crop loss/damage arising out of unforeseen events.
  • Stabilizing the income of farmers to ensure their continuance in farming.
  • Encouraging farmers to adopt innovative and modern agricultural practices.

Ensuring the flow of credit to the agriculture sector which contributes to food security, crop diversification and enhancing growth and competitiveness of the agriculture sector besides protecting farmers from production risks.

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What is Rythu Bandhu? The Telangana farmers’ scheme that everyone thinks is better than loan waivers

A few days ago, Chairman of India’s largest lender State Bank of India (SBI), Rajnish Kumar, said that loan waivers are not a permanent solution; instead, he argued for an investment scheme to increase the income of farmers on similar lines of Telangana’s Rythu Bandhu.

What is Rythu Bandhu?

In August this year, Telangana government launched ‘Rythu Bandhu’ investment support scheme for farmers.

The Rythu Bandhu (Agriculture Investment Support Scheme) takes care of initial investment needs of every farmer.

Aimed at relieving farmers of debt burden and cease them from falling into the debt trap again, the scheme provides a grant of Rs 4,000 per acre per farmer each season for the purchase of inputs like seeds, fertilizers, pesticides, labour and other investments in the field operations of farmer’s choice for the crop season.

A quasi UBI scheme:

Former Chief Economic Advisor Arvind Subramanian, who floated the idea of Universal Basic Income (UBI) for farmers in the Economic Survey, has said that Rythu Bandhu is a quasi UBI scheme, which had manifold benefits.

If Rythu Bandhu could be fiscally unsustainable but if it replaces some and all of the schemes such as schemes for bad harvests (monsoon failures), crop insurance and loan waivers, it could be advantageous. However, he also said that a scheme like Rythu Bandhu will take some time for implementation.

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M.S. Swaminathan calls GM crops a failure; Centre’s adviser faults paper

A research paper co-authored by leading agriculture scientist M.S. Swaminathan, which describes Bt cotton as a ‘failure,’ was criticized by India’s Principal Scientific Adviser (PSA), K. VijayRaghavan as ‘deeply flawed’.

The findings were published in paper ‘Modern Technologies for Sustainable Food and Nutrition Security’. It is a review of crop development in India and transgenic crops — particularly Bt cotton, the stalled Bt brinjal as well as DMH-11, a transgenic mustard hybrid.

Key observations made:

The paper notes that GE (genetically engineered) Bt cotton has failed in India. It has failed as a sustainable agriculture technology and has, therefore, also failed to provide livelihood security for cotton farmers who are mainly resource-poor, small and marginal farmers.

Besides, the precautionary principle (PP) has been done away with and no science-based and rigorous biosafety protocols and evaluation of GM crops are in place.

The paper also raises questions on the genetic engineering technology itself on the grounds that it raises the cost of sowing. Also, the insertion of foreign genes (in the plant) could lead to “molecular and cellular events not precisely understood.”

The government should only use genetic engineering as a last resort. Genetic engineering technology is supplementary and must be need-based. Only in very rare circumstance (less than 1%) may there arise a need for the use of this technology.

What is a GM crop?

A GM or transgenic crop is a plant that has a novel combination of genetic material obtained through the use of modern biotechnology.

For example, a GM crop can contain a gene(s) that have been artificially inserted instead of the plant acquiring it through pollination. The resulting plant is said to be “genetically modified” although in reality, all crops have been “genetically modified” from their original wild state by domestication, selection, and controlled breeding over long periods of time.

Do we need GM crops?

Yes and why?

  • Higher crop yields.
  • Reduced farm costs.
  • Increased farm profit.
  • Improvement in health and the environment.

No, and why?

  • It is clear that the technology of genetic engineering is an evolving one and there is much, especially on its impact on human health and environment that is yet to be understood properly. The scientific community itself seems uncertain about this.
  • While there are many in this community who feel that the benefits outweigh the risks, others point to the irreversibility of this technology and uncontrollability of the Genetically Modified Organisms (GMO) once introduced in the ecosystem. Hence, they advocate a precautionary approach towards any open release of GMOs.
  • One of the concerns raised strongly by those opposing GM crops in India is that many important crops like rice, brinjal, and mustard, among others, originated here, and introducing genetically modified versions of these crops could be a major threat to the vast number of domestic and wild varieties of these crops.
  • In fact, globally, there is a clear view that GM crops must not be introduced in centres of origin and diversity. India also has mega biodiversity hotspots like the Eastern Himalayas and the Western Ghats which are rich in biodiversity yet ecologically very sensitive. Hence it will only be prudent for us to be careful before we jump on to the bandwagon of any technology.
  • There is also a potential for pests to evolve resistance to the toxins produced by GM crops and the risk of these toxins affecting nontarget organisms. There is also the danger of unintentionally introducing allergens and other anti-nutrition factors in foods.
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Cabinet approves Agriculture Export Policy, 2018

The Union Cabinet chaired by Prime Minister Shri Narendra Modi has approved the Agriculture Export Policy, 2018.  The Cabinet has also approved the proposal for the establishment of Monitoring Framework at Centre with Commerce as the nodal Department with representation from various line Ministries/Departments and Agencies and representatives of concerned State Governments, to oversee the implementation of Agriculture Export Policy.

The Government has come out with a policy to double farmers’ income by 2022. Exports of agricultural products would play a pivotal role in achieving this goal. In order to provide an impetus to agricultural exports, the Government has come out with a comprehensive “Agriculture Export Policy” aimed at doubling the agricultural exports and integrating Indian farmers and agricultural products with the global value chains.

Objectives of the Agriculture Export Policy are as under:

To double agricultural exports from present ~US$ 30+ Billion to ~US$ 60+ Billion by 2022 and reach US$ 100 Billion in the next few years thereafter, with a stable trade policy regime.

To diversify our export basket, destinations and boost high value and value-added agricultural exports including the focus on perishables.

To promote novel, indigenous, organic, ethnic, traditional and non-traditional Agri products exports.

To provide an institutional mechanism for pursuing market access, tackling barriers and deal with sanitary and phytosanitary issues.

To strive to double India’s share in world agri exports by integrating with global value chain at the earliest.

Enable farmers to get the benefit of export opportunities in the overseas market.

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Network for Development of Agricultural Cooperatives in Asia and the Pacific (NEDAC) sets agenda for Cooperatives to cooperatives trade

Addressing the inaugural session of the General Assembly of Network for Development of Agricultural Cooperatives in Asia and the Pacific (NEDAC) in New Delhi Shri Parshottam K Rupala, Union Minister of State for Agriculture and Farmers Welfare said that NEDAC is a unique organization encompassing mix of Government and non Government organizations created by FAO for synergizing policies and programmes of government and cooperative institutions at country level. He informed that cooperatives have exhibited a better form of success stories to enhance production and better returns to produce from the market through collective action.

NEDAC was set up in 1991 by the United Nations’ Food and Agriculture Organisation (FAO), the International Cooperative Alliance (ICA) and the International Labour Organisation (ILO). NEDAC sensitizes Governments in the region on the role of agricultural cooperatives in promoting agricultural and rural development to ensure rural food and livelihood security for millions of people in Asia and the Pacific.

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Centre to reward high-performing States

 

States may soon start receiving extra funding for the Agriculture Ministry’s flagship schemes on the basis of their performance in encouraging agri-business, especially with regard to marketing, land and governance reforms.

Ease of Doing Agri-Business Index:

The new Ease of Doing Agri-Business Index will rank the States on the basis of reforms in the sector as well as their investment in agriculture, increased productivity, reduction of input costs, and risk mitigation measures.

The Agri Ministry will consider rewarding the higher performing States both in absolute and incremental terms by linking the performance with an allocation from flexi funds made available in the various flagship.

The proposed index will focus on reforms, with marketing reforms (25%) and governance and land reforms (20%) carrying almost half of the weight of the parameters in its scoring system.

The parameters are process-oriented and are meant to evolve as and when new reforms or initiatives are proposed.

Another major parameter which States will be rated on is their success in reducing the cost of farm inputs (20%) by distributing soil health cards and encouraging organic farming and micro-irrigation.

Risk mitigation measures such as crop and livestock insurance carry a 15% weight, while increased productivity and investment in agriculture carry a 10% weight each.

As agriculture is a State subject, the success of policies and reform initiatives proposed at the Centre is dependent on implementation by the States. To ensure that the reform agenda of the government is implemented at a desired pace by all State governments, there is a need to develop a competitive spirit between the States.

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Ministry of Food Processing Industries issues guidelines for OPERATION GREENS

Ministry of Food Processing Industries (MoFPI) under Union Minister Smt Harsimrat Kaur Badal has approved the operationalisation strategy for Operation Greens. Operation Greens was announced in the Budget speech of 2018-19 with an outlay of Rs 500 crores to stabilize the supply of Tomato, Onion and Potato(TOP) crops and to ensure availability of TOP crops throughout the country round the year without price volatility.

The strategy will comprise of a series of measures as decided by the Ministry which includes:

(I)   Short-term Price Stabilisation Measures

  • NAFED will be the Nodal Agency to implement price stabilisation measures. MoFPI will provide 50% of the subsidy on the following two components:
  • Transportation of Tomato Onion Potato(TOP) Crops from production to storage;
  • Hiring of appropriate storage facilities for TOP Crops;

(II)     Long-Term Integrated value chain development projects

  • Capacity Building of FPOs & their consortium
  • Quality production
  • Post-harvest processing facilities
  • Agri-Logistics
  • Marketing / Consumption Points

Creation and Management of e-platform for demand and supply management of TOP Crops.

The pattern of assistance will comprise of grants-in-aid at the rate of 50% of the eligible project cost in all areas, subject to maximum Rs. 50 crores per project. However, in the case where PIA is/are FPO(s), the grant-in-aid will be at the rate of 70% of the eligible project cost in all areas, subject to maximum Rs. 50 crores per project.

Eligible Organisation would include State Agriculture and other Marketing Federations, Farmer Producer Organizations (FPO), cooperatives, companies, Self-help groups, food processors, logistic operators, service providers, supply chain operators, retail and wholesale chains and central and state governments and their entities/organizations will be eligible to participate in the programme and to avail financial assistance.

The applicant fulfilling the eligibility criteria under the scheme is required to submit the online application on SAMPADA portal of the ministry (https://sampada.gov.in/) attaching therewith complete documents.

Background of Operation Greens

In the budget speech of 2018-19, a new Scheme “Operation Greens” was announced on the line of “Operation Flood”, with an outlay of Rs.500 crore to promote Farmer Producers Organizations, agri-logistics, processing facilities and professional management.

Major objectives of “Operation Greens” are as under:

Enhancing value realisation of TOP farmers by targeted interventions to strengthen TOP production clusters and their FPOs, and linking/connecting them with the market.

Price stabilisation for producers and consumers by proper production planning in the TOP clusters and introduction of dual-use varieties.

Reduction in post-harvest losses by the creation of farm gate infrastructure, development of suitable agro-logistics, the creation of appropriate storage capacity linking consumption centres.

Increase in food processing capacities and value addition in the TOP value chain with firm linkages with production clusters.

Setting up of a market intelligence network to collect and collate real-time data on demand and supply and price of TOP crops.

The significance of Operation Greens:

Operation Green (OG) wants to replicate the success story of Operation Flood, in fruits and vegetables, starting with three basic vegetables—tomatoes, onions and potatoes (TOP). The main objective of OG is to reduce price volatility in these commodities and thereby helping farmers augment incomes on a sustainable basis, as also provide these basic vegetables to consumers at affordable prices.

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Insurance cover for crop damage by animals too

The Union government has decided to cover damages to crops in wild animal attacks under the Pradhan Mantri Fasal Bima Yojna in select districts on an experimental basis, Agricultural Minister Radha Mohan Singh has said.

In this regard, Government has amended provisions of the crop insurance scheme in consultation with various stakeholders after review of its working for the last two years. The amended provisions of the scheme have been implemented from October 2018.

 As per the new provisions:

  • Certain horticultural crops have been brought under the ambit of PMFBY on an experimental basis.
  • Damages due to individual fields due to incidents of localized disasters like water logging, landslide, cloudbursts, hailstorms and fire too are brought under the scheme.
  • Henceforth, insurances firms will also have to spend 0.5% of their earnings from annual premium to advertise provisions of the scheme.
  • Fines in cases of delay in clearing insurance claims for crop damages have been proposed.
  • In case firm delays insurance clearances beyond two months, it will have to pay an annual interest of 12%. Similarly, State government too will have to pay interest of 12% in case of delay in the release of state’s share of subsidy in premium to insurance firms.

 About PMFBY:

In April 2016, the government of India had launched Pradhan Mantri Fasal Bima Yojana (PMFBY) after rolling back the earlier insurance schemes viz. National Agriculture Insurance Scheme (NAIS), Weather-based Crop Insurance scheme and Modified National Agricultural Insurance Scheme (MNAIS).

It envisages a uniform premium of only 2% to be paid by farmers for Kharif crops, and 1.5% for Rabi crops. The premium for annual commercial and horticultural crops will be 5%.

The scheme is mandatory for farmers who have taken institutional loans from banks. It’s optional for farmers who have not taken institutional credit.

Objectives:

  • Providing financial support to farmers suffering crop loss/damage arising out of unforeseen events.
  • Stabilizing the income of farmers to ensure their continuance in farming.
  • Encouraging farmers to adopt innovative and modern agricultural practices.
  • Ensuring the flow of credit to the agriculture sector which contributes to food security, crop diversification and enhancing growth and competitiveness of the agriculture sector besides protecting farmers from production risks.
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Govt launches Agmark online system

The government Wednesday launched an online platform for processing applications related to quality certification mark ‘Agmark’ for agricultural products.

Agmark is certification mark that assures conformity to a set of standards approved by the government agency Directorate of Marketing and Inspection.

Key facts:

It is being implemented across the country to conduct quality control functions.

It will be available 24×7.

It will make the process of application is simple, quick, transparent.

Through this online system, certificate of authorization (domestic), permission of laboratories (domestic), permission of printing press and services related to laboratory information management system will be provided online.

The online system will make processes easy, reliable and cost effective.  It also has provisions for online receipt of fees from the applicants as payments can be received in digital mode through bharatkosh.gov.in website.

Agmark is certification mark that assures conformity to set of standards approved by Government agency Directorate of Marketing and Inspection.

It is legally enforced by Agricultural Produce (Grading and Marking) Act of 1937 (and amended in 1986).

The present AGMARK standards cover quality guidelines for 205 different commodities spanning a variety of cereals, pulses, vegetable oils, essential oils, fruits & vegetables, and semi-processed products like vermicelli.

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Government modifies operational guidelines for Pradhan Mantri Fasal Bima Yojna (PMFBY)

The Government has decided to incorporate the provision of penalties for States and Insurance Companies for the delay in settlement of insurance claims under the Pradhan Mantri Fasal BimaYojana (PMFBY).

Provision of penalties for States and Insurance Companies for the delay in settlement of insurance claims has been incorporated.

There is a Standard Operating Procedure for evaluation of insurance companies and remove them from the scheme if found ineffective in providing services.

The Government has also decided to include perennial horticultural crops under the ambit of PMFBY on a pilot basis.

The scheme, as per the new operational guidelines provides add-on coverage for crop loss due to the attack of wild animals, which will be implemented on a pilot basis.

Aadhaar number will be mandatorily captured to avoid duplication of beneficiaries.

The insurance companies are given a target of enrolling 10% more non-loanee farmers than the previous corresponding season.

The insurance companies will have to mandatorily spend 0.5% of gross premium per company per season for publicity and awareness of the scheme.

The new operational guidelines address the current challenges faced while implementing the scheme by putting forth effective solutions. The much-demanded rationalization of premium release process has been incorporated in the new guidelines. As per this, the insurance companies need not provide any projections for the advance subsidy.

In April 2016, the government of India had launched Pradhan Mantri Fasal Bima Yojana (PMFBY) after rolling back the earlier insurance schemes viz. National Agriculture Insurance Scheme (NAIS), Weather-based Crop Insurance scheme and Modified National Agricultural Insurance Scheme (MNAIS).

It envisages a uniform premium of only 2% to be paid by farmers for Kharif crops, and 1.5% for Rabi crops. The premium for annual commercial and horticultural crops will be 5%.

The scheme is mandatory for farmers who have taken institutional loans from banks. It’s optional for farmers who have not taken institutional credit.

Objectives:

  • Providing financial support to farmers suffering crop loss/damage arising out of unforeseen events.
  • Stabilizing the income of farmers to ensure their continuance in farming.
  • Encouraging farmers to adopt innovative and modern agricultural practices.
  • Ensuring the flow of credit to the agriculture sector which contributes to food security, crop diversification and enhancing growth and competitiveness of the agriculture sector besides protecting farmers from production risks.
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