The Scheme’s Implementing Agency is the Agriculture Insurance Company of India (AIC) Ltd. The scheme is open to all farmers, including loanees and non-loanees, regardless of the size of their farm. The plan is now being adopted by 24 states and two union territories.
Who is eligible for crop insurance?
Ans: Farmers that plant notified crops in notified areas as determined by the State government are eligible for insurance. Loanee farmers’ crops are required to be insured, but non-loanee farmers can choose to insure their harvests. Q 4: What crops are covered by the various schemes?
How do you avail crop insurance?
Criteria for Eligibility
- Farmers, including share croppers and tenant farmers, can get Crop Insurance if they are growing the recognized crops in the area.
- Crop insurance benefits are also available to non-Loanee farmers who provide land documentation.
What is not covered in crop insurance?
Drought, excessive precipitation, hail, wind, frost, insects, and illness are all common natural causes. Price changes can be accommodated. Pesticide drift, fire, negligence, failure to follow Good Farming Practices, and other factors are not covered.
Who introduced crop insurance in India?
The first crop insurance scheme was launched in Gujarat in 1972-73 by the Life Insurance Corporation of India’s ‘General Insurance’ Department on H-4 cotton.
Why should farmers go for crop insurance?
Poor farmers in underdeveloped nations are disproportionately affected by natural disasters. Crop insurance also protects farmers from crop loss due to natural disasters, extreme weather, or revenue loss due to agricultural market price volatility. A farmer who is having trouble with his plough can be comfortable that in the event of a calamity, he will at least be compensated.
What are the benefits of crop insurance?
I Income Stability: It protects farmers from crop failure-related losses. It functions as a tool for farmers to manage yield and pricing risks. (ii) Minimal Debts: With the help of the suitable insurance partner, farmers may repay their loans even when their crops fail.
What is covered in crop insurance?
Agricultural producers acquire crop insurance, which is subsidized by the federal government. Natural disasters such as deep freezes, floods, droughts, excessive wetness, sickness, hot weather, and other natural calamities are covered. There are also coverage alternatives available that combine yield and price protection. It can protect farmers from potential revenue losses owing to low market prices and lower yields.
A Standard Reinsurance Agreement (SRA), which is a contract between the firm and the FCIC, must be signed by the company. FCIC will give subsidies on eligible crop insurance policies sold by the corporation, according to the terms and conditions.
Subsidies were provided to 2.1 million farmers across the United States. Corn, soybeans, cotton, and wheat are the most common crops they grow. Agribusiness, farms, and agricultural groups receive this payment as an agricultural incentive. It’s a kind of income supplement for the farmer. Farmers were able to provide a balanced supply of agricultural goods because to the subsidies. If supplies are sufficient and well-managed, the cost of basic foods will be reasonable.
In the United States, there are two types of crop insurance. Crop-Hail is covered by the private sector, while MPCI (Multiple Peril Crop Insurance) is backed by the federal government and the private sector. The Federal Crop Insurance Program provides MPCI.
In 1938, Congress passed the Federal Crop Insurance Act. The country was suffering from the Great Depression and dust storms at the time ( The Dust Bowl ). Private insurers struggled to provide inexpensive insurance plans due to unforeseen disasters. The potential for catastrophic losses from agricultural productivity was simply too great. As a result, they devised the first federal crop insurance program as a means of providing assistance. The United States Department of Agriculture (USDA) established the Federal Crop Insurance Corporation (FCIC) to administer the country’s federal crop insurance program. Their key goals are as follows:
- Farmers’ income and harvest are protected from crop failure or price decreases.
- To assist business and employment by ensuring a consistent flow of farm supplies and stable farm purchasing power. The scope of government crop insurance has widened over time. Here are some of the changes that have occurred over time:
1980 A bill was passed that provided premium subsidies, added a new crop variety to the list of eligible crops to insure, and expanded coverage to additional parts of the country.
In the years 1988, 1989, 1992, and 1993, a slew of unanticipated natural disasters struck, necessitating the payment of disaster aid fees.
The Federal Crop Insurance Reform Act is passed in 1994. They enhanced the subsidies and made certain benefits coverage mandatory.
The Risk Management Agency was established by the United States Department of Agriculture in 1996. ( RMA). Their objective is to hire an agent to run and manage the Federal Crop Insurance Program. It’s also the year that the required enrollment requirement was abolished.
The Permanent Disaster Assistance Program was established in 2008. The Food, Conservation, and Energy Act of 2008 altered the law in order to reduce total costs.
Agricultural Act of 2014 In 2014, there was a significant change in commodities programs. Additional crop insurance alternatives are included. Specialty crop, bioenergy, organic farming, and rural development programs have all been expanded. Supplemental Coverage Option (SCO) and the Stacked Income Protection Plan (STAX) were also introduced this year. These two new solutions were created to assist producers in increasing their protection against price drops and natural disasters.
2018 The 2018 Farm Bill makes significant changes to product pricing. They supplement their data with information from the USDA, the National Agricultural Statistics Service (NASS), and the Farm Service Agency (FSA). Specialty crops, such as industrial hemp, were given more coverage alternatives. Furthermore, the coverage was expanded to encompass farms that operate across numerous counties. In addition, a Veteran Farmer or Rancher category was created to provide veterans with additional advantages. Independent insurance businesses play an important role in the farming industry, according to the changes.
President Trump suggested changes to the Federal Crop Insurance Program in 2019. Crop insurance and farm subsidies should be optimized by eliminating payments for higher-income farmers. The massive crop insurance premium subsidies that were offered to farmers must also be decreased as part of the modifications.
The first and most prevalent type of federal crop insurance is MPCI. This insurance must be obtained prior to planting in order for the farmer’s claims to be valid if he or she needs to file one. Multiple peril insurance is available through the Federal Crop Insurance Program. It is a public-private collaboration between 15 private insurers who have been permitted to write MPCI policies by the US Department of Agriculture Risk Management Agency, or USDA RMA. Among their responsibilities are:
Private companies are required to market insurance to all eligible farmers who require it.
Furthermore, they must keep a significant portion of the risk, up to 80% of the original policy. RMA is the one who will determine what premium rates for multiple peril insurance will be. They regulate the amount to be charged as well as the crops that can be insured in the US. The federal government also subsidizes farmer-paid premiums; as a result of the government’s assistance, farmers can save a significant amount of money. In addition, private insurance companies are reimbursed for administrative and operating costs associated with premiums that should be paid by farmers. Crop insurance became more inexpensive for farmers as a result of this strategy. The major purpose of congress, to establish a unified and organized agriculture sector, was achieved with the financial backing of the federal government, the help of the private sector, and regulatory authority.
USDA RMA, the Risk Management Agency of the United States Department of Agriculture, will choose which crops will be covered under the federal program in each county. They calculated it based on the likelihood of losses and the level of demand for coverage in each county. The cost of insurance and the amount the insurer must pay out in the event of a loss is determined by the worth of the crops. Multiple Peril Crop Insurance is chosen by more than 90% of farmers who purchase crop insurance. MPCI has about 120 distinct crops, albeit not all of them are available in every section of the United States.
Crops usually covered under the federal scheme, often known as traditional crops, include:
Crops that can be insured, however their chances of passing as insurable crops vary by region:
Specialty crops, unlike standard crops, have not received significant federal crop insurance backing. The federal crop insurance coverage for specialized crops has risen as the legislation has changed throughout time. Federal crop insurance is now available for 38 speciality crops. The government crop insurance list currently includes almost 80 different varieties of vegetables, fruits, nursery crops, and tree nuts.
The Federal Crop Insurance Program does not cover crop hail. It is offered directly to farmers by private insurers. Crop-hail insurance can be obtained at any moment during the growing period, unlike MPCI, which must be purchased before planting the plants. However, as compared to MPCI, its coverage is limited. Hail, fire, wind, lightning, robbery, and vandalism are among the threats covered by crop-hail.
Farmers frequently acquire crop-hail insurance because hail can completely damage crops. Farmers emphasized protecting their high-yielding crops, especially in hail-prone areas. Farmers who choose this sort of insurance are also those who fall below the government coverage criteria or are not covered by the federal program but wish to protect their farms against damages.
According to the United States Department of Agriculture Risk Management Agency, hail accounts for nearly 6% of all crop losses in a year. Farmers that use this policy must first choose a dollar amount of coverage, after which they can choose from a variety of deductible options. Farmers will be able to partially self-insure their crops at a cheaper premium cost as a result of this. The acre-by-acre coverage approach is another component of the crop-hail program. This allows the farmer to only file a claim for the damaged portion of the farm. As a result, even if the rest of the field is unaffected, the claim will be qualified for payment.
Crop-hail insurance is required for farmers who reside in hail-prone areas. Farmers that cultivate sensitive crops like wheat, soybeans, and corn should think about it as well. Because this insurance is both reasonable and rated, it can be used in locations where hail isn’t as common.
A yield-based policy aids farmers who have seen a yield decrease when compared to their usual or historical production. A historical yield can be calculated over a one-year, two-year, or even five-year period. It serves as a benchmark for the mutual fund’s current performance. Consider the following scenario: Let’s say the present yield is 5%; one can compare it to previous years’ yield percentages. It is then easier to establish whether the current yield % on the mutual fund is a good return or not.
The basic disaster coverage pays out if losses surpass 50% of the average yield. Farmers will be paid 55% of the current market price for their crop yields. Farmers must also pay an administrative fee despite the fact that they are not paid premiums for catastrophic coverage. Farmers have the option of increasing their coverage. But there’s a catch: they’ll only cover a percentage of the cost; the rest will be covered by the government.
The majority of farmers want a revenue-based program. It can cover a single crop or an entire farm, making it more flexible than a yield-based strategy. Farmers can select a coverage level ranging from 50% to 75% of the total yield average.
The NAP, or Non-insured Crop Disaster Help Program, provides financial assistance to non-insurable crop growers. Farmers can apply for crop disaster assistance if they experience losses owing to low yields, inability to plant crops due to natural disasters, or loss of inventory.
What is premium rate in crop insurance?
Farmers will pay a maximum premium of 2% for all Kharif Food and Oilseeds crops, 1.5 percent for Rabi Food and Oilseeds crops, and 5% for Annual Commercial/Horticultural Crops. The Centre and the State will split the difference between the premium and the rate of insurance charges paid by farmers.