Page 36 - Insurance Times September 2021

dependent on government support, as a viable insurance bills by Parliament: Agricultural Produce Trade and
model, according to industry watchers. Among different Commerce (Promotion and Simplification) Bill and Farmers
clusters for different crops, the highest premium in the (Empowerment and Protection) Price Assurance Bill. The
current kharif season after finalization of bids, is around the protests against them represent political dishonesty and the
same level as the average of last summer crop season MSP influence of middlemen, considering that they together with
culture, and too much reliance on low value land intensive changes in Essential Commodities Act to remove cap on stock
crops has been the culprit in many suicide prone areas while holdings can herald a New Deal for the agriculture sector:
high production and market risk crops like cotton in others. 1. The first bill is aimed at liberating the farmer from the
oppressively unjust situation he had been locked in. He
Most problematic is farmers' reliance on traders, was forced to sell his produce at the local market, where
commission agents, and moneylenders for credit as factors such as the domination of a cartel, price
institutional credit reaches only 65% of them and more of information asymmetry, and poor infrastructure worked
small and marginal farmers are excluded from this to his detriment. If the ordeal of having to wait endlessly
institutional credit net. This private source borrowing leads in adverse and humiliating conditions forced him to
to interlocking of credit and output, input and output, and submit to the ruthless mandi mafia, high transportation
credit and input markets where there is implicit over pricing costs ate into his already meager profit. This virtually
of farm inputs and under-pricing of farm output of the amounted to a state sanctioned heist. Once the first
farmers and they can't access other channels even if they legislation is enacted, farmers will be freed from the
offer better prices as they don't offer credit to farmers who grip of the middleman, and able to sell their produce
are tied to traders and agents. to buyers from across the country at a price they deem
to be fair and at a time of their choosing. Freedom to
This restricts their freedom to choose channels provided by sell at the farm gate will do away with transportation
new Acts.. The prices are still determined and driven by expenses, and thus boost incomes. This is a giant stride
APMC markets which are still not adequately regulated and, towards the fulfillment of the dream of 'One Nation,
in many cases, mistreat farmers. Whatever new market One Market' 75 years after Independence.
channels like contract farming and direct purchase may
2. The second soon-to-be enacted law will help farmers
emerge for farmers, small farmers will continue to depend
go for contract farming with agriculture trade firms,
on APMC markets for many commodities. There is no need wholesalers, big retailers and exporters. The provision
for co-operative farming. What is needed is pre-production of market linkages at the sowing stage itself will insulate
and post production aggregation to buy better and sell them from production and price vagaries. It will also
better or to capture higher surplus in the food and fibre lead to introduction of better technologies, technical
value chains. Annual (combined kharif and rabi) loss cost of assistance, crop insurance and credit facilities. Contract
India's three national MPCI schemes in operation since 2000: farming will also encourage private investment in the
NAIS (2000-2015); MNAIS (2010-2015); PMFBY (2016-
financially starved sector and open the way for growth
present) is as follow:
of agro-based industries and better storage, thus
removing shackles which
caused stagnation. This will
lead to higher income for
farmers who will be able to
modernize farming
methods and innovate to
suit the demand for cash
crops and agro-industry.
Kharif season loss cost for
combined NAIS, MNAIS,
and PMFBY historical
results and AIR MPCI Model
for India recast using
Landmark Bills: current PMFBY insurable exposure and 2018 revised

This approach has now seen the passage of two landmark policy conditions can be seen as below:

36 The Insurance Times, September 2021