Page 34 - Insurance Times September 2021

Further, there are market risks like absence of market, poor The Power Balance:
price realization, high transaction cost, and poor bargaining The power balance hence is not with the farmer but with
power due to small marketed surplus. This leads to low and the MNCs that are calling the shots through the WTO, the
unstable farm income for these producers. It is here that World Bank and governments. The ordinances promulgated
the role of market becomes crucial as even if a farmer has
by the government reflect a growing partnership with this
produced efficiently but is not able to sell well, the story is corporate power and not actions taken in favour of farmers.
lost. The distress among small farmers in India is therefore
India cannot become 'Atmanirbhar' by selling our farmers
market driven to a large extent in both ways- too much interests to the corporates. At a time when the world is
protection (MSP) or too little protection. India is considered debating over how to deal with the impacts of climate
to be vulnerable to the effects of climate change due to
change on agriculture and countries are contesting policy
several factors like high dependence on agriculture, low
measures, there have been growing calls from farmers'
coverage of irrigation, lower resource availability at advocacy groups and non-governmental organizations to
individual farms and unavailability of proper technology to revamp the trade regime of the WTO to coordinate it with
combat the risk.
mitigation and adaptation policies to tackle climate change.
Other factors like dominance of small and medium sized
Now, when India is witnessing twin problems of drought and
holdings coupled with inherent lacunae like farmers' apathy
floods simultaneously, the need of the hour is to have laws
towards newer technologies, unscientific post-harvest that protect farmers' income. What is needed is a drought,
management, and un-organized and chaotic marketing flood and cyclone protection law for farmers to ensure
system, also contribute to making agriculture a perilous income for damaged crops, not with an insurance model
endeavor in India. Crop insurance offers benefits for both,
advocated by WTO but a state-supported scheme. We have
farmers as well as Government: it helps farmers to cope with seen how the AoA promoted insurance scheme turned out
risk through pay offs at the event of crop loss, and help to be cash juggler for the insurance companies and loss for
Government by reducing the burden on disaster payments the government and farmer with claim rates and claim
to farm sector. In spite of its importance, crop insurance in amounts being low. Making MSPs redundant through the
India has not gained much popularity amongst the farming
latest ordinances show how India is playing to the developed
community.
nation's gallery.
Innate lacunas in insurance schemes coupled with apathy Moreover, by allowing contract farming in India through
of farmers to such schemes rooted through lack of these ordinances brings under questions the intention of the
awareness are the main reasons for low spread of crop government in a nation where more than 86% of the
insurance in India. Giving much required policy thrust to crop farming community owns less than two hectares of land. The
insurance, the Government has launched the insurance policy of contract farming shifts the power balance away
programme PMFBY, which is an improved version of earlier from the farmer to the company. It will push the farmer as
similar schemes. Though there are many issues and a land-owning tenant to the interest of the corporates.
challenges, the new scheme is a boon to farming
Gauging crop risk in India is challenging because risks for
community, if implemented in the right spirit. A progression
different locations, crops, and crop seasons depend on many
of Indian crop insurance schemes followed as the country
variables, some correlated and some uncorrected.
put forth efforts to improve its program:
Limited PMFBY experience (loss history) also
contributes to uncertainty about present risk.
Probabilistic modeling is the best approach to
overcome this uncertainty and account for the
complex mixture of factors associated with risk
to PMFBY-insured crops and associated
(re)insurance losses. Growth of premiums and
annual variation in claims for India's three
national MPCI schemes in operation since 2000:
NAIS, 2000-2015; MNAIS, 2010-2015; and the
PMFBY, 2016-present is shown as follow:

34 The Insurance Times, September 2021