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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