Agriculture Insurance

AGRICULTURE INSURANCE 

 BEYOND SIMPLY CROP INSURANCE

Our economy is, predominantly, an agrarian economy which ensures food and nutrition to India’ billion people, raw materials for its expanding industrial base and surpluses for exports, and more importantly daily bread and butter to about seventy percent of the farming community for the services they render to the society.

Despite, its being vital sector of the economy, it is prone to high levels of risks which mainly emerge from the natural elements which include highly uncertain events such as drought / famine, floods, cyclone, inundation, hailstorm, frost, cold/heat waves etc. Besides, diseases related to plants and animals like scab, anthrax etc., insects and pests, which have adverse effect on the agricultural productivity.

The agriculture sector is also subject to uncertainties in social, environment, technological and economic factors which have casual effects on the effective demand and fluctuations in process of agricultural inputs which in turn impact the quality of agri-products and trade potential.

Agriculture Insurance represents an effective risk management tool to provide security to the farming sector against such uncertainties. The government has taken some steps in this direction but nothing much has been achieved so far.

BACKGROUND         AND EVOLUTION

The concept of Agriculture Insurance is not new in our country and has been available in some or other form since independence it self. The question of introduction of Agriculture Insurance in the form of crop insurance scheme was taken up for examination soon after the Indian independence in 1947 and a special study was commissioned in 1947-48 to examine the modalities but the focus of this study too was limited to crop insurance and cattle insurance.

In 1965, the Government introduced a Crop Insurance Bill but different experiments on crop insurance on a limited, ad-hoc and scattered scale started from 1972-73. Meanwhile, the general insurance business was nationalized and, by an Act of Parliament, the General Insurance Corporation Of India was set up which took over all these schemes. and some systematic efforts started.

In the backdrop of the aforesaid experimental schemes for crop insurance, a study was commissioned by General Insurance Corporation and entrusted to eminent agricultural economist, Prof. V.M.Dandekar. Based on recommendations of Prof. Dandekar, a Pilot Crop Insurance scheme was introduced by GIC from 1979, which continued till 1984-85. The focus of this scheme was crops only, which included Cereals, millet, Oil-seeds, cotton, Potato and Gram.

With effect from 1^st April 1985, the Government Of India introduced the Comprehensive Crop Insurance Scheme (CCIS) for major crops, coinciding with the introduction of the Seventh- Five –Year Plan, with active participation of State Governments though it was optional for the state governments. The subject matter of the scheme was, again limited to crops only which included food crops, pulses and oil seeds.

While, CCIS was still being implemented, attempts were made to modify the existing CCIS from time to time as demanded by the states. During 1997, a new scheme, the Experimental Crop Insurance Scheme (ECIS) was introduced.

Thereafter, in view of the demands of States for improving scope and contents of CCIS, a broad-based “National Agricultural Insurance Scheme (NAIS)” was introduced in the country in 1999-2000. The scheme was administered by the Ministry of Agriculture and initially implemented by General Insurance Corporation of India on their behalf. This scheme besides food crops and oil seeds, also covered annual commercial/horticultural crops. The objective of NAIS is to provide insurance coverage and financial support to the farmers in the event of failure of any of the notified crop as a result of natural calamities, pests & diseases and stabilize farm incomes, particularly in disaster years.

So much has been  done in respect of Agriculture Insurance but,  the scope of all these schemes has been limited to crop insurance only which remains only a segment of the area .

Another milestone in the field has been set by way creation of Agriculture Insurance Company Of India Limited (AICL) which has been formed by the Government of India consequent to the announcement by the  Union finance Minister in his General Budget Speech of the year 2002-03. The AICL has taken over implementation of National Agricultural Insurance Scheme (NAIS)

THE REFORMS AND DEVELOPMENT ENVISAGED IN AGRICULTURE SECTOR

While discussing needs and scope of agricultural insurance, in addition to the present day scenario, we will always have to keep in mind the reforms and development envisaged in this sector. The new Agriculture Policy of government explains them very elaborately.

The National Policy on Agriculture seeks to actualize the vast untapped growth potential of Indian agriculture, strengthen rural infrastructure to support faster agricultural development, promote value addition, accelerate the growth of agro business, create employment in rural areas, secure a fair standard of living for the farmers and agricultural workers and their families, discourage migration to urban areas and face the challenges arising out of economic liberalization and globalization.

Sustainable Agriculture

The policy will seek to promote technically sound, economically viable, environmentally non-degrading, and socially acceptable use of country’s natural resources – land, water and genetic endowment to promote sustainable development of agriculture. Measures will be taken to contain biotic pressures on land and to control indiscriminate diversion of agricultural land for non-agricultural purposes. The unutilized wastelands will be put to use for agriculture and afforestation. Particular attention will be given for increasing cropping intensity through multiple cropping and inter-cropping.

Food and Nutritional Security

Special efforts will be made to raise the productivity and production of crops to meet the increasing demand for food generated by unabated demographic pressures and raw materials for expanding agro-based industries. Attention will be given to development of new crop varieties, particularly of food crops, with higher nutritional value through adoption of biotechnology particularly genetic modification, while addressing bio-safety concerns.

A major thrust will be given to development of rain fed and irrigated horticulture, floriculture, roots and tubers, plantation crops, aromatic and medicinal plants, bee-keeping and sericulture, for augmenting food supply, exports and generating employment in rural areas.

Animal husbandry and fisheries also generate wealth and  employment in agriculture sector. Development of animal husbandry, poultry and dairying and aquaculture will receive a high priority in the efforts for diversifying agriculture, increasing animal protein availability in the food basket and for generating exportable surpluses.

Research and Technology

Application of frontier sciences like bio-technology, remote sensing technologies, pre and post-harvest technologies, energy saving technologies, technology for environmental protection through national research system as well as proprietary research will be encouraged. The endeavor will be to build a well organized, efficient and result-oriented agriculture research and education system to introduce technological change in Indian agriculture. Up gradation of agricultural education and its orientation towards uniformity in education standards, women empowerment, user-orientation, vocationalization and promotion of excellence will be the hallmark of the new policy.

Inputs Management

Adequate and timely supply of quality inputs such as seeds, fertilizers, plant protection chemicals bio-pesticides, agricultural machinery and credit at reasonable rates to farmers will be the endeavor of the Government.

Protection to plant varieties through a sui generis legislation, will be granted to encourage research and breeding of new varieties particularly in the private sector in line with India’s obligations under Trade-related Intellectual Property Rights (TRIPS) Agreement. Integrated pest management and use of biotic agents in order to minimize the indiscriminate and injudicious use of chemical pesticides will be the cardinal principle covering plant protection.

Incentives for Agriculture

The government will endeavor to create a favourable economic environment for increasing capital formation and farmer’s own investments by removal of distortions in the incentive regime for agriculture, improving the terms of trade with manufacturing sectors and bringing about external and domestic market reforms backed by rationalization of domestic tax structure by reviewing  the taxes on food grains and other commercial crops. Investments in Agriculture

The agriculture sector has been starved of capital. A conducive climate will be created through a favourable price and trade regime to promote farmers’ own investments as also investments by industries producing inputs for agriculture and agro-based industries. Private sector investments in agriculture will also be encouraged .

Rural electrification will be given high priority. The quality and availability of electricity supply will be improved and the demand of the agriculture sector will be met adequately in a reliable and cost effective manner. The use of new and renewable source of energy for irrigation and other agricultural purposes will also be encouraged.

Bridging the gap between irrigation potential created and utilized, completion of all on-going projects, restoration and modernization of irrigation infrastructure including drainage, evolving and implementing an integrated plan of augmentation and management of national water resources will receive special attention for augmenting the availability and use of irrigation water.

Emphasis will be laid on development of marketing infrastructure and techniques of preservation, storage and transportation. The establishment of cold chains, provision of pre-cooling facilities to farmers as a service and cold storage in the terminal markets and improving the retail marketing arrangements in urban areas, will be given priority. Up gradation and dissemination of market intelligence will receive particular attention.

Setting up of agro-processing units in the producing areas to reduce wastage.

Agriculture Insurance Company of India Limited

In the union budget for the year 2002-03, the  Finance Minister announced the establishment of an organisation to exclusively cater to agriculture insurance. Accordingly, Agriculture Insurance Company Limited was formed by the Government and incorporated on 22^nd December 2002 for implementation of National Agricultural Insurance Scheme (NAIS), which until March 31, 2003 was being executed by the General Insurance Corporation of India.

The AICL has been promoted by General Insurance Corporation of India (GIC), National Bank for Agriculture and Rural Development (NABARD), National Insurance Company Limited, New India Assurance Company Limited, Oriental Insurance Company Limited and United India Insurance Company Limited.

The AICL has since taken over the implementation of the NAIS from GIC. The NAIS is optional to states and extends to all farmers, loanees on compulsory basis and non-loanees on voluntary basis in the implementing states. The scheme covers food crops and oils seeds and annual commercial/horticultural crops.

Now on, AICL would be transacting all insurance businesses directly or indirectly concerning agriculture and its allied activities and, to start with, has   taken over the implementation of National Agricultural Insurance Scheme (NAIS) which until 2003 was implemented by General Insurance Corporation of India.

The mission statement says that the AICL has been created to provide financial security to persons engaged in agriculture and allied activities through insurance products and other support services.

With this, perhaps for the first time we get an indication that the scope of agriculture insurance is going to spread beyond simply crop insurance.

PRESENT STATUS OF AGRICULTURE INSURANCE

Now, with this, the main responsibility to take care of agriculture insurance lies with AICL which has completed just over an year and has not yet to started working full steam. The initial efforts of AICL are again focused on the crop insurance only and National Agriculture Insurance Scheme has been taken over by it for implementation and, in fact, they have started implementing the same.

In addition to earlier efforts by the Crop Insurance Cell GIC, the state owned insurance companies have been catering to the needs of farmers and agricultural community through their rural insurance schemes which are as under –

1.    Livestock cover ( cattle, sheep, goat, elephant, bullocks etc)

2.    Bird Covers ( poultry, ducks etc.)

3.    Sub-animal covers ( sericulture, freshwater fish, prawn etc.)

4.    Human Cover ( like Janta Personal Accident, Gramin Personal Accident Universal Health etc.)

5.    Plants Covers ( for cash crops )

6.    Other rural covers ( well, bio-gas plants, pump sets, hut, bullock cart etc.)

Now, with liberalisation of the industry even the private Insurance Companies too have started taking some steps in this direction but they are still sounding hesitant. One of the private insurance companies ICICI-Lombard has devised a weather- index based insurance product with support from ICICI Bank and the World Bank. It covers the likelihood for diminished agricultural output/yield resulting from a shortfall of any of the pre-defined weather parameter for a specific geographical location and time period, subject to a maximum of the sum insured. But again seeks to address the traditional crop insurance schemes. Some of other insurance companies have also devised some products but they are mainly personal accident covers like IIFCO-TOKYO has devised a cover, which goes with number of fertilizer bags, purchased.

RISK STRUCTURE OF AGRICULTURE SECTOR

As any other sector, the agriculture sector is also exposed to variety of risks, which can be classified, broadly, as under:

Meteorological Risks

This includes natural calamities and climatic risks, such as flood, drought, inundation, cyclone, hailstorm, Plants diseases, insects and other pests.

Social Risks

This includes risks related to human elements, such as fire, burglary, malicious damage, theft, burglary embezzlement, civil commotion and other moral hazards.

Economic Risks

The economic risks are little lesser in case of agriculture sector but nevertheless they are there. These risks include adverse price fluctuations and depreciation in the value of investment in agriculture

Personal Risks

All activities involve human element and so is the case with agriculture and therefore, all risks pertaining human being are available in this sector too. These risks are accident or disease suffered by farmers or his family member, death, disablement etc.

Other Risks

This includes all left over risks like breakdown of agricultural implements including tractors, trailer, Legal Liability, Storage and transportation risk, Financial Risk etc.

RISK MANAGEMENT

All these agricultural activities – existing or proposed in the National Agriculture Policy, have quite a vide range and is subject to variety of risks and uncertainties. All these risks fall under one of these two categories, viz. natural calamities and risks arising out technological advancement and development. There are several methods of handling these risks.

There are certain risks which are inherent to the activity and the only way to handle those kind of risks is to avoid undertaking that activity itself which is, indeed, very drastic way of handling the risk and therefore we have no choice but to accept those risks.

There are certain kind of risks in case of which it is possible to reduce the frequency or severity of the losses. By way of contingency planning it is possible to minimise the extent of losses caused by the occurrence of a loss producing event. Beside making plans to minimise physical damage by ensuring that people are trained to deal promptly with emergencies and to carry out salvaging operations.

Risk can also  be handled by retaining the same i.e. meet the losses out of one’s own resources but that is possible only in case of relatively smaller losses. The bigger losses can be met by setting aside some contingency funds but again there is limit to that too. It can be done individually as well as by combining a large number of independent farmers.

Probably, the best way to handle a risk is by way of insuring the same. Again there is a limitation to this because all the risks can not be underwritten by the insurers and even if the insurance is available, it will be available at prohibitive cost. So some of the risks will have to be born by the farmers where as some risks can be transferred to the insurance company by purchasing suitable insurance policy.

In order, to devise suitable products and to cater the specific needs of the agricultural community,  the government has promoted a separate Insurance Company, in addition to already existing state owned four insurance companies, to cater the needs of Agriculture Sector.

WHY AGRICULTURE INSURANCE SHOULD GO BEYOND SIMPLY CROP INSURANCE

·         Limited purpose will be served

Agriculture covers wide varieties of activities and crops is one of them. If we confine our focus to one this segment alone then only limited purpose will be served. The idea is to develop the agriculture sector as a whole and not any particular segment. The reforms and development in this sector will thro’ open many new areas,  opportunities and threats which will definitely require matching agri-insurance products.

·         Crop Insurance alone will not be a viable proposition

o   Premium subsidy burden; and

The government has been subsidising the crop insurance premium charged to small and marginal farmers to the extent of 50 percent in order to ensure that the resource poor farmers are able to afford insurance. For six seasons from Rabi 1999-2000 to Kharif 2002 total amount spent on subsidy is Rs. 15754.91 lacs which is a huge amount by any standard.

The intention is definitely noble but we have to understand that no activity can sustain for indefinite period of doles and subsidies. Eventually, the subsidy regime has to go make the farmers self-sufficient.

o   Claim Ratio

The claim amount for crop insurance under National Agriculture Insurance Scheme for  the same six seasons from Rabi 1999-2000 to Kharif 2002 is whopping Rs.358479.49 lacs as against the premium of Rs.85893.14 lacs in this respect. With such a heavy claim experience, we can not call it an insurance activity.

One of the  main reason for such a heavy claim experience is limited  spread and coverage under the scheme. Despite so much efforts only  85.65 lacs farmers could be covered under the scheme in Kharif 2001 and 20.83 lacs farmers in Rabi 2001-2002.

o   High Administrative Cost

High administrative cost has made the scheme unsustainable in the  long term.

SCOPE AND POTENTIAL - BEYOND CROP INSURANCE

There is a vast scope beyond crop insurance and that needs to explored and exploited. Now, we will have a look at the areas hitherto either left unexplored or remained under exploited.

Cattle and Livestock

Live stock sector is a prominent sector among agriculture and allied activites in India. In 1997-98, live stock alone contributed to 25 percent of the total value of agriculture GDP.

By and large the dairy farming is the most popular subsidiary occupation amongst small and marginal farmers and the most common occupation  for landless laborers, who consider it as the only means for earning their livelihood and for their socio-economic upliftment. Cooperative dairies on the Amul pattern have been successfully established and new dairies like those established by Rajasthan Cooperative Milk Federation and the Punjab Dairy Development Corporation have come into existence. Thereby the farmers are getting better prices for their products now.

With massive surge in favour of dairy industry, the need for Cattle insurance has assumed very large proportions. Even if one considers 20% of the bovine population of 289 millions ( as per 1992 livestock census-205 million cattle and 84 million buffaloes), i.e. about 58 million is insurable. As per one estimate note more than 10% of these cattle and buffaloes are covered under insurance. Hence there is tremendous scope for further expansion of cattle insurance in India.

The position of live stock insurance is getting from bad to worse, which is depicted, in the following table-

Year	No. of animals insured (millions)	Premium Collected (Rs. in crores)
1997-98	22.83	137.06
1998-99	23.50	145.47
1999-2000	17.10	131.19
2000-01	15.35	144.70
2001-02	16.49	135.38

Source: Ministry of Agriculture

Now when we compare the number of total livestock with the number of livestock covered under the insurance schemes, it becomes quite evident that substantial number remains uncovered.

Poultry

Poultry means domesticated species of birds, reared for eggs, meat, and feathers and includes chicken, ducks, gees, turkey, quails, guinea fowls, etc. The poultry farming has found a special favour with the rural poor because of its ability to provide supplementary income in the shortest possible time and without heavy demands on capital resources.

The poultry production in the country has made significant progress over the years due to research and development thrust of the government and organised private sector. It has transformed from a backyard activity into a modern, scientific and vibrant industry driven by technology. India is the second largest egg producer and one of the top ten broiler producers in the world. Our poultry industry contributes approximately Rs.22,000 crores to the GNP and supports the livelihood of 2.0 million people. The egg production has increased to the level of 28 billion during 1996-97 as compared to 10 billion during 1980-81.

Hatcheries established in India produced about 208 million improved layer chicks and broiler chicks in 1996-97, consisting of about 100 million broilers chicks and about 108 million hybrid layer chicks.

With the increasing popularity of commercial poultry farming at all levels and in al parts of the country, the demand for day-old chicks is gaining increasing momentum. Consequently, more and more hatcheries are being set up. Hatchery includes farm house, hatchery building, stores, staff quarters, etc. Thus, in turn, it is increasing the scope of poultry insurance.

Dairy Development

Dairy sector ranks first among the individual agriculture commodities in terms of total value of production. The value of milk output and its products is 70,000 crores rupees and that of dairy industry as a whole is 1,05,000 rupees.

The significant role played by cooperatives in stimulating dairying has proved to be an important source of progress of the rural economy. Operation Flood Programme, which was world’s largest dairy development programme, has grown beyond expectations and has since completed it III phase in 1996.

By March 1997 about 73,930 dairy cooperative societies were organised in 170 milk sheds involving over 9.3 million farmer members which by now must have increased substantially. As per world bank experts opinion, for an initial investment of Rs.200 crores in Operation Flood II, the net return/year to the rural economy had been rupees 24,000 crores.

The milk production is showing steady increase from the level of 685 lacs tonnes in 1996-97 to 846 lac tonnes in the year 2000. With this India stands first in world milk production. 12 percent of total milk produced in the country is processed in 567 dairy factories for conversion into milk and milk products valued at Rs.6934 crores annually.

Productivity performance of dairy industry across the country has registered an annual growth of 17.1 percent for the country as a whole with highest market share of 23.5 percent for Maharashtra  followed by Gujrat with 17.2%.

With this scenario, the scope of insurance directly in this sector and allied sector is very promising and which we cannot afford to ignore.

Horticulture/Plantation

Agro climatic suitability coupled with abundance of natural resource endowment, equips India with a unique comparative edge in the cultivation of a variety of horticultural crops. In realization of their potential for providing nutritional security, employment generation capacity and foreign exchange earnings, horticulture has been accorded the top priority in the last two five year plans. 

Horticulture toady contributes for over 24.5 % of the countries agricultural GDP, over 10% of the total agricultural export earnings and supports more than 19 percent of the labour force. India contributes 10-13 percent of the total world production of fruits and vegetables occupying second place in the world. Fruits are grown in an area of over 3.73 million ha in India, contributing to an annual production of 46.04 million tonnes in 2001.

Vegetable- based industries are emerging as powerful engines for economic growth in rural India. India is the second largest producer of vegetables in the world, accounting for about 10 percent of the world’s production. In 2002, India produced 78.2 million tons from 5.73 million ha of land. India is a major exporter of vegetables, exporting approximately $246 million of vegetables annually.

In addition to above, the contribution of plantation output to GDP is also on increase and provides for a good scope for diversifying the base of agriculture insurance in this sector. This includes Rubber plantation, Tea Plantation, Apple Plantation, and other fruits plantation.

Medicinal and Aromatic Plants

Medicinal and Aromatic Plants, natural source of raw material for industrial products offer a great scope to achieve net higher returns. With ever increasing demand of natural products in food pharmaceutical, perfumery, flavour and cosmetic industries cultivation of MAPs has now become popular and economically viable proposition.

Farm Mechanisation

In order to enhance the efficiency, farm mechanisation is on increase. In addition to tractors, variety of agriculture implements are being used by the farmers which includes D G Sets, Thrashers, Tube well, Pumps, Chaff Cutters, Trailers, Hole Digger, Front Loader, Front Dozer, V-Ripper, Back-Hoe, Mixavator for composting, Sugarcane Harvester, Sugarcane Leaf Stripper cum De-Topper, Baler and Shredder for Bio-Mass Co-Generation.

These machines are subject to accidental break down and need insurance cover.

Biogas Plants

The National Project on Bio-gas Development (NPBD) of the Ministry of Non-Conventional Energy Sources was started in 1981-82 for promotion of family type biogas plants, the current potential of which is estimated at 12 million, to provide clean alternate fuel to the rural masses and enriched organic manures for agriculture.

BARRIERS

1.   New Concept

The agriculture insurance is a relatively new concept in India and is still in developing phase. Though some efforts were made by the government in this direction but the pace and intent was found to be lacking.

2.   Limitation of Subsidy.

In view of poor financial status of the majority of the farming community, the immediate efforts of the government have been to subsidise the insurance premiums charged to small/marginal farmers to the extent of 50 percent. But, there is always limit to subsidy and to cover such a vast area thro’ such a heavy subsidy will consume huge funds out of funds allocated to agriculture sector.

3.   Paying capacity of farmers

Majority of farmers are small and marginal with very poor paying capacity. Together, ‘small and marginal’ farmers constitute 78 percent of the Indian farming population, owning only 32 percent of area operated. This resource poor segment being impoverished, have recourse mainly to informal sources of finance which are very meager and not even sufficient to ensure food for self and family. In such a state of affair, sparing money for paying insurance premium is something impossible.

4.   Lack of education

Majority of farmers belong to villages which do not have adequate education facilities and therefore, remained illiterate. Lack of education deprives them from understanding importance and benefits of agri-insurance. They do not understand as to how risk of few is spread over many.

5.   Lack of efficient channels of distribution

Presently, we have two channels of distribution,  Agency force and Brokership System. The later one is recent phenomena and has to develop as yet particularly in view of agriculture insurance it needs to go a long way because their roots are mainly in urban area.

Though the agency force has some base in rural areas but their activities could not penetrate very far as the individual premium amount is very small. Their area of operation was limited only to Banks from where they could get chunk premium.

6.   Public Sector Monopoly

Insurance sector, as a whole, has been public sector monopoly since 1973. Only government owned four subsidiaries of General Insurance Corporation were authorised to transact insurance business. This restriction has definitely contributed to stunted growth of insurance sector in general and agri-insurance in particular.

7.   Low incentives

Even the best of schemes will never take off if the implementation force is not offered good incentive and so was the case with agriculture insurance. The incentive offered to the agents by way of commission was only 5% whereas the cost involved by way of travelling to far flung areas and others was almost equal to, if not more, the incentive because agri-insurance business is scattered far and wide in villages and the individual premium was very less.

STRATEGIES TO MOVE AGRICULTURE INSURANCE BEYOND CROP SEGMENT

Product Development

The PSUs already have quite a vide range of products but as the scenario is changing fast in view of globalisation of agriculture sector too, new and tailor made products will be required by the sector. Even the features of old products will need to be reviewed and enriched.

Pricing

As we have seen the target group being small and marginal farmers their premium paying capacity is very limited. At present, the premium rates range from 1.5 percent to 3.5 percent for food crops and oil seeds. Keeping in view the paying capacity rates are stiff. The only way it can be helped is by bringing more and more people under the fold of insurance – more the spread less the premium.

Effective Channels

We need to develop and sustain effective and efficient channels of distribution for agri-insurance products. For instance, already existing large branch network of commercial banks, cooperative institutions and  postal network. In fact, initiatives in this direction have already started like some of the PSUs have tied up with Nationalised Banks for distribution of their products. Even tie-up with postal network has been finalised by Oriental Insurance Company Limited, one of the PSUs.

In addition to above, we can explore possibilities of developing dedicated channels such as Rural Agents at block levels to reach the Agri-insurance facility to the door steps of the farmers, particularly those in resource poor segments. The system of brokers, a newly introduced channel, can be utilised for this purpose.

Promotional Strategies

For creating awareness and educating people in this direction suitable publicity campaigns should be organised, if need be, with help of Central and State governments, Central agencies like DAVP, Doordarshan, and state extension agencies can be utilised for carrying the message of agriculture insurance and its importance to villages. The insurance can be popularised as one of the important input like fertilizer.

Simplification of Procedures

The existing procedures for procuring insurance and claim processing are very cumbersome and time consuming. Due attention should be accorded towards simplification and systematization of the entire process of agri-insurance business in such as way that financial security can be effectively packaged and delivered to all segments of the farming community.

Holistic Approach.

In view of globalisation of the agriculture sector and the new Agriculture Policy, it has become more than necessary to cater to the insurance requirements of agriculture and allied sectors in a holistic manner.

This will include addressing specific requirements pertaining not only to crop insurance, but also would extend in respect of horticulture, plantation, cattle and live stock, poultry, sericulture, aquaculture (shrimps and prawns), fresh-water fish, apiculture, sericulture, agricultural implements etc.

Comprehensive package

In order to make it convenient, a comprehensive package of all relevant insurance policies for farmers should be devised and made available which includes insurance for the assets, agri-inputs, tractors, other agriculture implements, dwelling houses, personal accidents, health etc.

Confidence Building

The focus of all these activities should be to build confidence in agricultural community which will secure sustainable production in the sector ensuring food and livelihood security for supporting enhancement of competitiveness.

CONCLUSION

The agricultural rural markets are still virgin territories to a great extent and offer exciting opportunities for insurance companies. The surest path to success is to judge and measure the requirements of the people correctly and offer such schemes that they would understand and able to afford. There is also an urgent need to enter into tie-ups or understandings with government agencies to ensure the success of the schemes. The need of the hour is to have innovative policies that have explicit benefits for the people to observe, understand and measure. However, all of these have to be supported by appropriate policy measures at the ground level.