Proceedings Report on

“Farm Income Insurance:

Issues and Way Forward” Date: 4th September, 2014 Venue: Mahatma Mandir, Gandhinagar

Organized by Knowledge Partner Event Partner

Supported by

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CONTENTS

About the Conference .......................................................................................................................................... 3

Inaugural Ceremony ............................................................................................................................................ 3

List of Dignitaries ................................................................................................................................................ 4

Welcome Address by Shri. Babubhai Bokhiria, Hon’ble Agriculture Minister of Gujarat ......................... 5

Inaugural Address by Shri. Radha Mohan Singh, Hon’ble Union Minister of Agriculture, Government of India ........................................................................................................................................................... 6

Keynote Speech by Smt. Anandiben Patel, Hon’ble Chief Minister of Gujarat .......................................... 6

Concluding Remarks by Shri. Raj Kumar, IAS, Principal Secretary, Agriculture and Cooperation Department, Government of Gujarat ...................................................................................................... 7

Technical Sessions ............................................................................................................................................... 9

List of Speakers .................................................................................................................................................... 9

Presentation by Mr. B. S. Rahul, Deputy General Manager, Agriculture Insurance Company of India Limited ...................................................................................................................................................... 9

Presentation by Mr. Malay Kumar Poddar, Chief Financial Officer, Agriculture Insurance Company of India Limited ........................................................................................................................................... 11

Presentation by Shri. Raj Kumar, IAS, Principal Secretary, Agriculture and Cooperation Department, Government of Gujarat ........................................................................................................................... 13

Presentation by Ms. Harini Kannan, Head Agriculture - South West Asia, Swiss Re Services India Private Ltd ............................................................................................................................................................ 15

Panel Discussion:............................................................................................................................................... 17

List of Panel Members ....................................................................................................................................... 17

Presentation by Shri. Raj Kumar, IAS, Principal Secretary, Agriculture and Cooperation Department, Government of Gujarat ........................................................................................................................... 18

Presentation by Mr. P. J. Joseph, Chairman-cum-Managing Director, AICIL ....................................... 20

Presentation by Mr. P. C. James, Chair Professor, National Insurance Academy, Pune ........................ 20

Presentation by Prof. Gopal Naik, Professor, Indian Institute of Management, Bangalore .................... 21

Presentation by Mr. Mohini Mohan Mishra, National Secretary, Bhartiya Kisan Sangh ........................ 23

Concluding Remarks by Dr. Dalip Singh, IAS, Additional Secretary of Agriculture, Department of Agriculture and Cooperation, Government of India ............................................................................. 24

Question and Answer Session ..................................................................................................................... 25

Conclusion of the Panel Discussion ............................................................................................................ 26

Vote of Thanks by Dr. N. K. Singh, Managing Director, Gujarat Agro Industries Corporation Limited 28

Way Forward ..................................................................................................................................................... 29

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About the Conference

India is an agrarian economy with almost half the total employment from this sector. Hence, understandably farmers are the backbone of the Indian economy and they have right to get viable prices for their products. With this view, Government of India implemented “National Agriculture Insurance Scheme (NAIS)” covering around 35 crops during each of the Kharif and Rabi seasons. NAIS is a yield-guarantee scheme which operates on the basis of broadly homogeneous area being the unit of insurance. It is widely felt to introduce a new Farm Income Insurance Scheme to protect the farmers against both yield and price risks.

To envision the blueprint of this concept, Agriculture & Co-operation Department, Government of Gujarat in coordination with Agriculture Insurance company of India Limited (Partner Organization), KPMG (Knowledge Partner) and Radeecal Communications (Event Partner) organized a National Seminar on “Farm Income Insurance: Issues and Way Forward” at Mahatma Mandir, Gandhinagar, Gujarat on September 4, 2014 as a pre-cursor to the Vibrant Gujarat 2015 Summit. This event provided a platform to address the issues and to evolve a suitable insurance mechanism for protection of farmers against yield and price fluctuations.

The event witnessed wide participation of around 1000 delegates including representatives

from Government of India, Agriculture Secretaries and Managing Directors of Marketing

Boards of major states, Reserve Bank of India, government and private insurance companies,

nationalized banks, co-operative banks, Gramin Banks, farmers’ organization, progressive

farmers, APMCs, insurance policy experts, industry players and academicians.

Inaugural Ceremony

The national Seminar on “Farm Income Insurance: Issues and Way Forward” was

inaugurated by Shri. Radha Mohan Singh, Hon’ble Union Minister of Agriculture,

Government of India and was presided over by Smt. Anandiben Patel, Hon’ble Chief

Minister, Government of Gujarat. The event was graced by the presence of Shri. Babubhai

Bokhiria, Hon’ble Agriculture Minister of Gujarat; Shri. Nanubhai Vanani, Hon’ble Sports

Minister of Gujarat; Shri. Bhupendrasinh Chudasma, Hon’ble Minister of Education and

Food & Civil supplies, Gujarat; Shri. Pradeepsinh Jadeja, Hon’ble Minister of Law, Gujarat

and Shri. Kantibhai Gamit, Hon’ble Minister of Tribal development, Gujarat along with Dr.

Dalip Singh, IAS, Additional Secretary of Agriculture, Government of India; Dr. Varesh

Sinha, IAS, Chief Secretary of Gujarat and Shri. Raj Kumar, IAS, Principal Secretary,

Agriculture and Cooperation Department, Government of Gujarat.

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List of Dignitaries

Name Organization Designation

Shri. Radha Mohan Singh Government of India Hon’ble Union Minister of Agriculture

Smt. Anandiben Patel Government of Gujarat Hon’ble Chief Minister

Shri. Babubhai Bokhiria Government of Gujarat Hon’ble Agriculture Minister

Shri. Nanubhai Vanani Government of Gujarat Hon’ble Sports Minister of Gujarat

Shri. Bhupendrasinh Chudasma

Government of Gujarat Hon’ble Minister of Education and Food & Civil supplies

Shri. Pradeepsinh Jadeja Government of Gujarat Hon’ble Minister of Law

Shri. Kantibhai Gamit Government of Gujarat Hon’ble Minister of Tribal development

Dr. Dalip Singh, IAS Government of India Additional Secretary of Agriculture

Dr. Varesh Sinha, IAS Government of Gujarat Chief Secretary

Shri. Raj Kumar, IAS Government of Gujarat Principal Secretary to Government of Gujarat, Agriculture and Cooperation Department

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Welcome Address by Shri. Babubhai Bokhiria, Hon’ble Agriculture Minister of Gujarat

Hon’ble Agriculture Minister of

Gujarat, Shri. Babubhai Bokhiria,

started off the event by welcoming all

dignitaries on the dais and the

participants. He stressed on ensuring

stability in farm income as

agriculture is the main source of

income for almost half of the total

population. He further explained that

with insured income the farmer can

use newer technologies and resource

which will eventually lead to their

betterment. He briefed the audience

on the initiatives and achievements by Government of Gujarat for the benefit of the farmers.

He said that with the help of check dams, Khet Talavavadis, soil health cards, and Sujlam

Sufalam Yojana; the state has managed to achieve the growth rate of more than 10% in

agriculture sector in the past decade.

In addition, he informed the participants that Gujarat government has made the Crop

Insurance Scheme more transparent with the help of online tools and software at disposal.

He further stated that to promote the agriculture sector in the state, the year 2014-15 will be

celebrated as ‘Krishi Vikas Varsh’ in Gujarat and went on to brief upon the recently

inaugurated Gujarat's first ever Gama Radiation Processing Facility (GRPF) in Ahmedabad

district.

Concluding his address, Hon’ble Minister thanked the organizers for the conceptualization and coordination of event on such a significant topic.

Following the welcome address, all the dignitaries on the dais were presented with fruits and agriculture products. These products, following a unique tradition started by Hon’ble Chief Minister of Gujarat, Smt. Anandiben Patel, were later distributed to the children in the Anganwadi.

The seminar was then inaugurated with the lightening of the lamp by all the dignitaries

present. A short interactive film on the topic “Farm Income Insurance: Issues and Way

Forward” was showcased to throw light on the theme of the seminar.

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Inaugural Address by Shri. Radha Mohan Singh, Hon’ble Union Minister of Agriculture, Government of India

Hon’ble Union Minister of Agriculture, Shri.

Radha Mohan Singh, in the inaugural address

stressed upon yield risk and price risk as the

two key reasons for the need of farm income

insurance. He briefed the participants on the

changing agricultural scenario in India and

appreciated the growth and development in

the agriculture sector in Gujarat. He added

that farmer faces many uncertainties in

income owing to various reasons, of which

uncertainties in weather was the major one.

He furthermore explained that just by

providing subsidies, the income of the

farmer cannot be ensured.

Moving on, he stressed upon empowering farmers as the foundation-stone of agricultural development, since farmers are the backbone of Indian economy. He explained the importance of Soil Health Card and praised the efforts made by the state government in this direction. He further mentioned that 100 mobile laboratories will be developed for soil testing and issuing Soil Health Cards across the nation. He quoted Pandit Deendayal Upadhyay by saying “Water to every farm, Employment to everyone” and pointed towards the need of better irrigation facilities. Emphasizing the need of improving the infrastructure facilities in the Krishi Vigyan Kendras, Hon’ble Minister enumerated 7 new Krishi Vigyan Kendras to be introduced in Gujarat.

He concluded the address by welcoming the concept new Farm Income Insurance Scheme.

Keynote Speech by Smt. Anandiben Patel, Hon’ble Chief Minister of Gujarat

Hon’ble Chief Minister of Gujarat welcomed all the dignitaries and participants to the event and appreciated their effort in showing such overwhelming interest. She started off her address by showing the strength of Gujarat in managing a significant growth in agriculture sector despite the intermittent droughts and the absence of perennial rivers in the state.

She pointed out that the previous insurance schemes were based on the loss faced by the

farmers rather than the actual income of the farmer. She stressed upon the need of an

insurance scheme that ensures the income of the farmer based on the investments made by

him.

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Hon’ble Chief Minister pointed

towards better infrastructure as a

vital ingredient for the agriculture

sector to flourish. She mentioned

that Gujarat government has

provided better irrigation,

transportation and electricity

facilities to farmers. She also

informed that the development of

canals has been started with the

support of farmers and major

canals will be built by 2015. She

praised the increasing involvement

of women in the agriculture and

allied sectors in Gujarat and added

that Gujarat government has

introduced several initiatives and schemes to promote the role of women in the sector.

However, speaking about the negative aspect, she appealed to the farmers not to keep their family deprived of healthy foods in attempt to save more. She also stressed upon the need of better storage facilities and indicated that the state government has decided to provide subsidies for building silos/warehouses. She also requested the dignitaries and participants to visit the International Exhibition “Agritech Asia” to get acquainted with the latest technologies in the agriculture sector. Hon’ble Chief Minister also encouraged the farmers to move towards value added services as a next step in agricultural evolution.

She enumerated the benefits of the organic farming, highlighted the emergence of a trend towards it and then encouraged the farmers towards organic farming. Furthermore, she emphasized the need of carrying out the research done by scientists for the benefit of the agricultural community and informed that Gujarat has been able to achieve such high growth in agriculture sector due to such effective practices.

Following the keynote speech, the fruits presented to the dignitaries were collected by

representatives of Anganwadi to provide them to the children.

Concluding Remarks by Shri. Raj Kumar, IAS, Principal Secretary, Agriculture and Cooperation Department, Government of Gujarat

Shri. Raj Kumar, IAS, Principal Secretary, Agriculture and Cooperation Department, Government of Gujarat concluded the inaugural session by showing the importance of agriculture as the main source of income for more than half the total population. He explained that in today’s scenario, a farmer has no control over the prices he gets by selling the crops. Hence, he further emphasized on the right of the farmers to get commensurate price for their investment and hard work. He buttressed the significance of the seminar which has been organized to provide a platform to all the experts in agriculture sector to

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discuss and evolve a suitable insurance mechanism for protection of farmers against yield and price fluctuations. He especially thanked Smt. Anandiben Patel, Hon’ble Chief Minister of Gujarat, and Shri. Radha Mohan Singh, Hon’ble Union Minister of Agriculture, for gracing the event with their presence and for providing support towards the evolution of such insurance scheme. He also extended his appreciation and gratitude towards all the dignitaries and participants for showing such enthusiasm.

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Technical Sessions

Following the inaugural session, the event showcased four technical presentations pivoted

around the basics of crop insurance schemes and challenges; crop revenue insurance and

fundamental market requirements to set up such scheme; and the analysis of pilot Farm

Income Insurance Scheme (FIIS).

List of Speakers

Name Organization Designation

Mr. B. S. Rahul Agriculture Insurance Company of India Limited Deputy General Manager

Shri. Raj Kumar, IAS Agriculture & Co-operation Department, Government of Gujarat

Principal Secretary

Mr. Malay Kumar Poddar

Agriculture Insurance Company of India Limited

Chief Financial Officer

Ms. Harini Kannan Swiss Re Services India Private Ltd.

Head Agriculture - South West Asia

Presentation by Mr. B. S. Rahul, Deputy General Manager, Agriculture Insurance Company of India Limited

Topic - The basics of Today’s Crop Insurance – Current Scenario and Challenges/ Risks

Involved

Mr. B. S. Rahul started off the topic with the fact

that small and medium farm-holders account

for 81% of the total farmers. He briefed the

audience upon the present agriculture

scenario in India. He pointed out the efforts

made by the government to improve the

condition of the farmer. He further mentioned

previous schemes introduced to ensure the

income of farmer as well as crops till date.

However, he added that the majority of the

schemes introduced till date are area based

and has not been able to meet the expectations

due to various reasons.

Unlike normal insurance schemes, Mr. Rahul remarked, agricultural schemes are not annual

but rather on a seasonal basis. Explaining the crop insurance system in India, he added that

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the schemes acted as collateral in which lending agency has the first lien. It often happened

that farmer was not aware of the insurance payment credited directly in the bank account.

He mentioned that due to this, the direct effect of the insurance was diminished. He further

explained that sum insured was based on production cost and was availed up to the value of

yield only which worked as a safety net. He further elaborated that in this system, claims

process is automated.

He elaborated the implementation mechanism of insurance schemes in India, explaining that

all the insurance schemes have been run with government support only. The insurance

Companies are selected and allocated the districts for implementation of the scheme. State

Governments set up the administrative mechanism in their respective state. The farmers

avail crop loan from financial institutions and claims are settled by the insurance companies

to the insured accounts through financial institutions. He pointed out that availing insurance

on individual basis through individual assessment is not feasible at present due to shorter

time span of the insurance scheme.

He further moved to explain the National Agricultural Insurance Scheme [NAIS]. NAIS, he

added, is all risk insurance scheme and operates on area based approach covering all food

crops, oilseeds & annual commercial/ horticultural crops. He informed that the scheme is

available to all farmers - compulsory for borrowing & optional for non-borrowing. In this

scheme indemnity is calculated on actual yield data based on Single Series CCEs (Crop

Cutting Experiments) furnished by State Govt.

He explained the three components of the latest National Crop Insurance Programme (NCIP)

- Modified National Agricultural Insurance Scheme (MNAIS), Weather Based Crop Insurance

Scheme (WBCIS) and Coconut Palm Insurance Scheme (CPIS). He pointed out the pros and

cons of MNAIS. MNAIS covers prevented/failed sowing; post-harvest loses; and loses

accorded due to natural calamities on individual basis. He furthermore explained that the

WBCIS scheme is parametric product scheme based on ‘Crop-Weather’ relationship. The

scheme operates on area approach linked to a reference weather station and the sum insured

is based on ‘cost of cultivation’.

He further listed the major challenges in the agricultural schemes as large number of CCE,

limited use of technology, issues in credit delivery system, challenges in forecasting of

weather, selective and inconsistent participation, varying premium rates based on

geography and lack of awareness & insurance literacy etc.

Moving ahead, Mr. Rahul pointed out the risks involved in the agricultural sector of India,

namely yield risk and price risk as most significant ones. He further explained that yield risk

is generated from random uncontrolled inputs like weather including drought, flood,

cyclone, inundation, hailstorm, frost, cold waves etc. and also listed the factors that affect the

price risk namely, supply & demand, quality / perishability, price fluctuations and trade

barriers.

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Finally, he concluded his presentation by mentioning that the production risks are covered

under current schemes but price risk are yet to be covered and emphasized the importance

of evolving a crop insurance scheme providing both production and price risk coverage.

Presentation by Mr. Malay Kumar Poddar, Chief Financial Officer, Agriculture Insurance Company of India Limited

Topic - Lessons from pilot Farm Income Insurance Scheme (FIIS)

Mr. M. K. Poddar briefed the audience about the FIIS that was introduced in 2003-04 for two

harvest seasons. He enumerated the lessons learnt from the scheme based on the report by

Joint Group 2004, Government of India.

Providing the background on FIIS, Mr. Poddar explained that farmers’ income is a function

of yield & market price. The risks are high and even normal production may fetch low price.

He further expanded on NAIS that it covered only yield fluctuations and does not guarantee

the revenue for the farmer. And hence the scheme doesn’t

provide income security.

Elaborating the objectives of the FIIS, Mr. Poddar said

that the scheme provided comprehensive income

protection in the event of loss due to yield and/or price

fluctuations. The scheme aimed to help maintain flow of

agricultural credit. Moreover, this scheme encouraged

progressive farming practices both in terms of

technology & market economics.

Explaining further, Mr. Poddar mentioned that FIIS aimed to reduce Government

expenditure on procurement at MSP (Minimum Support Price) and paves way for gradual

exit from MSP regime. He also added that the scheme was envisioned to streamline yield

assessment procedures and pricing mechanisms to help build up comprehensive database.

Furthermore, he mentioned that the main benefit derivable from the scheme was that it

provided income risk protection to entire produce as against income protection of only

marketable surplus under MSP regime.

Mr. Poddar then explained the salient features of FIIS and mentioned that the Agriculture

Insurance Company of India Ltd. was the implementing agency for FIIS which was

compulsory for loanee farmers and voluntary for non-loanee farmers. He further informed

the participants that all risks leading to loss in farm income were covered under the scheme,

which included adverse fluctuations in yield due to any non-preventable natural perils as

well as adverse fluctuation of market prices.

Mr. Poddar elaborated on the method by which the sum insured was calculated. He explained

that yield was taken at unit area while market price and premium rates were determined at

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district level. He added that the product of average yield of past 7 years, indemnity level and

MSP were used to calculate the sum insured under the scheme.

Explaining the indemnity procedure, Mr. Poddar said that the procedure was automated and

farmers need not lodge any claims. He added that actual income was determined by the

production of current season’s actual yield and market price. And the difference between

guaranteed income and actual income would be paid to farmers. He further explained that

for this purpose, Daily Modal Price (DMP) for 8 weeks starting from the first arrival of grain

is recorded by each APMC. Moreover, for ensuring the sum, the cap of 20% was provided in

MSP for price fluctuation in the market price.

Mr. Poddar also mentioned that NAIS was withdrawn for the crops covered by FIIS in the

districts chosen for the Pilot and the MSP-Procurement system was withdrawn in the

districts in which Pilot Project on FIIS was implemented. He informed that under FIIS in Rabi

2003-04, 15 district of 8 states were covered and in Kharif 2004, 19 districts of 4 states were

covered.

He then went on to explain the observations of Joint Group 2004, Government of India. It was

observed that target of 100 districts remained unfulfilled as many states disagreed with the

proposal of suspension of MSP based procurement in areas of FIIS. It was further mentioned

that the consensus from the state was that the scheme would not benefit farmers as yield &

price offset each other and the states also believed that the premium rates were higher than

NAIS even after subsidy. Further, the exclusion of risky crops like soybean, groundnut, cotton

etc. was also one of the reasons that FIIS was not widely acclaimed. The Joint Group 2004

also observed that market price for superior varieties hardly goes below MSP, making

guaranteed income less attractive. It was observed that probability of claims is less as both

yield and price go down together rarely due to the negative correlation between them.

Further improper functioning of APMC/ Mandi Boards and unavailability of past & even

current data were pointed out as another challenges in the successful implementation of FIIS.

It was also found out that since yield fluctuation and the price risk were already being taken

care of by NAIS, FIIS did not hold much relevance then. Following this observations, FIIS was

discontinued from Rabi season 2004-05.

Pointing out the key learnings from pilot FIIS 2003-04, Mr. Poddar mentioned that the

scheme was conceptually ideal, but it was premature to substitute the deep-rooted MSP

regime. This was because MSP was available to all farmers at no additional cost whereas FIIS

was only available to insured farmers. There was also an anomaly between prices as

guaranteed income was assessed on technical basis but claims are reimbursed based on

market price.

Mr. Poddar also pointed towards the suggestions of Working Group (WG) on Risk

Management in Agriculture for XI Five Year Plan 2007-2012. Working Group considered

Income Insurance as a comprehensive risk mitigation tool in agriculture and recommended

revival of FIIS with some suggestions. It was suggested that guaranteed income should be

based on ‘futures’ price from Commodity Markets and that that the scheme could be tried

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initially for price sensitive crops like pulses and oilseeds in 40-50 selected districts.

Highlighting an important suggestion by WG, Mr. Poddar said that the premium rates

charged to the farmer would be at par with those charged under ‘area yield’ insurance

schemes. Some of the other important suggestions pointed out by Mr. Poddar included small

unit area for assessment, creating awareness in farmers and removing farmers’

apprehensions and inhibitions. It was also suggested to decide on the status of MSP as MSP

and FIIS cannot run in parallel to avoid ‘double benefit’ by farmers. Being specific on the

technicalities, Mr. Poddar further added that financial liabilities and roles & responsibilities

of all stakeholders should be clearly defined and suggested that a comparative study of

developed markets vis-a-vis ours should be carried out. Concluding the insights from

Working Group, Mr. Poddar affirmed that procurement at MSP should be continued till 50%

coverage is achieved.

Moving on, Mr. Poddar stressed upon the transparency and clear definition of roles and responsibilities of all the stakeholders involved including state government, implementing agency and banks. He emphasized the need of functional market mechanism /matured commodity markets to independently determine the price fluctuation between sowing and harvesting. Mr. Poddar also suggested that a realistic deductible should be operationalized i.e. only a significant shortfall in revenue should trigger claims. He in turn also added that the scheme should be more attractive than existing insurance schemes and MSP regime in order to be accepted widely and stressed upon the need of a stable long term policy and formulation of Agricultural Risk Protection Act. He concluded his presentation by suggesting that reinsurance capacity building within the Country is the need of the hour.

Presentation by Shri. Raj Kumar, IAS, Principal Secretary, Agriculture and Cooperation Department, Government of Gujarat

Topic - Crop Insurance Scheme – Gujarat State experience and Reforms required in

existing scheme

Shri. Raj Kumar started off his

presentation by informing that NAIS

has been in operation in Gujarat for

last 15 years. He mentioned that

recently the GoI has made the option

available to the States to choose from

either existing scheme or the new

scheme. He then briefed the audience

on the initiatives taken by Gujarat

government to overcome the

shortcomings of the NAIS.

He cited an example of year 2012,

when the sowing area itself was less than the insured area due to the delayed rain. Hence, a

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huge problem arose in settling the insurance claims. It was then decided by GOI that the

claims of the farmers would be settled by applying area reduction factor.

Genesis of the claim settlement issues were due to manual system of data collection, collation

and aggregation which had made the proper assessment to be difficult. Hence, the need of

reforms in the implementation procedure of NAIS. He further explained that the existing

schemes provide insurance for the loss of yield as compared to the threshold yield. He also

added the nature of other kind of insurance which are weather based, in which the

assessment is carried out based on the weather parameters including rainfall, gap in rainfall,

moisture etc.

Mr. Kumar elaborated the key challenges in successfully implementing the insurance

scheme. He pointed out high premium rates beyond the value of threshold yield is one of the

major concerns of the farmers when it comes to the NAIS. The other issue is that the farmers

who do not avail any loans are often deprived of the insurance schemes due to lack of

awareness. He further underlined the moral hazards as a key challenge since farmers prefer

buying insurance in difficult year only and there is almost non-existent field verification of

crops by banks/ insurance companies. This is contradictory to the general rule that any

insurance scheme will be successful if maximum people participate. The other key challenge

mentioned by him was uneven distribution of risk among stakeholders. Under NAIS, risks

are largely borne by governments.

He mentioned that one of the major reasons of the above is that all the land records of the

state are computerized and is available online. Through this system, the farmer is able to

apply for the insurance scheme online. He further informed that the state government has

developed a collaborative portal with banks and farmers as key stakeholders

(kcc.gujarat.gov.in). It also provides an excellent platform to farmers to know everything

about the NAIS before applying for the insurance online. He also mentioned that through this

online application system, total transparency has been ensured and therefore chance of

moral hazards has been reduced & speed and accuracy in implementation of NAIS could be

achieved which will ultimately lead to the faster settlement of crop insurance claims.

Moving forward, he pointed out the likely outcomes of these reforms and said that there is a

less likelihood of area discrepancy and application of area reduction factor. He mentioned

that instead of uniform level of TY (Threshold Yield)/AY (Average Yield) at State level, this

reform would facilitate crop-wise TY/AY in every Block. Further, he also informed that this

enables the use of mobile communication for crop specific extension services. Pointing out

the transparency and trust among the stakeholders as the most important outcomes of the

reform, which would bring down commercial rates of premiums as envisaged under

NCIP/NAIS. He further stressed that increased level of transparency and trust would

eventually bring down the risks borne by the stakeholders and with the help of lower risks,

the premium rates will be brought down by the insurance companies. He also urged the

banks to reach out to unbanked farmers and issue KCC.

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Elaborating on the reforms in the agriculture sector in Gujarat, Mr. Kumar then delineated

the various reasons due to which the state has been able to achieve the average growth rate

of 10% in the past decade, major steps being promoting micro irrigation, soil health cards,

water conservation, etc.

Mr. Kumar concluded his presentation by requesting all the stakeholders to think in the

direction and come up with an insurance scheme with low premium rates.

Presentation by Ms. Harini Kannan, Head Agriculture - South West Asia, Swiss Re Services India Private Ltd

Topic - Crop Revenue Insurance - Case studies from mature markets

Ms. Harini Kannan briefly compared the

indemnity, index and revenue insurance. She

explained that Indemnity Insurance is a classical

insurance with on-spot loss assessment. She

mentioned that this is more suitable in the

regions where average land holding per farmer is

high. She further explained that in the indemnity

insurance, losses are covered by actual

assessment of individual losses. She further

stressed that structuring indemnity products is

not cost effective in such regions.

Explaining the Index Insurance, she mentioned that it is best suitable for regions like Asia

where average land holding area is lower and the agriculture insurance schemes introduced

India are index based mostly.

Talking about the Revenue Insurance, she mentioned that farm income insurances are

revenue insurances. She explained that revenue insurance is a combination of yield data and

price data. She informed that in American markets, it is believed that this insurance should

be made available for the crops that are traded in future exchanges.

Analyzing the worldwide crop insurance markets, she pointed out that USA and Canada are

the largest market in this sector by volume of premiums. She mentioned that India is a fast

emerging market in this sector, currently ranking fourth worldwide. She informed that this

included all types of insurance covering agriculture and allied sectors. She provided

examples of scattered attempts made worldwide in the direction of revenue insurance and

added that in Asia, area yield index is the most popular among others while index insurance

is the most popular in India.

Ms. Kannan elaborated on several conditions that need to be fulfilled for a revenue product

to be quantifiable and attractive to the farmers. Further explaining the subject she stressed

upon the need of a liquid future exchange market for standardized soft commodities. She

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added that regional/local future markets can be considered only after prior assessment

about liquidity and trading volumes. She further stressed upon the need of a sound price

finding mechanism to determine the final settlement price at the time of the harvest to assure

that the commodity future is still liquidly traded. She emphasized on availability of

sufficiently long yield data series at the appropriate spatial resolution and lastly mentioned

the need of good fundamental understanding of correlation between yield and price.

Explaining the challenges in predicting yield data, she showed her support to the use of

Terrestrial Observation Prediction System (TOPS) system developed by NASA and

implemented in the state of Maharashtra to predict the yield data. Talking about the price

data, she stressed upon using reliable data from a third party source and furthermore

suggested to set up price trigger mechanism in Insurance products based on percentage of

crop arrival in Mandis. She emphasized the need and importance of historical data to

structure products and a reliable data source for current claims settlements.

She further explained this with the help of case study of USA. She mentioned that in USA,

reliable historical yield data is available and is derived from future exchange only. She

explained the reason behind premium rates being higher than other insurance schemes and

said that revenue insurance offers higher coverage. Additionally, the available coverage

levels are 50% to 75% under the revenue insurance which covers unavoidable perils,

naturally occurring events and price fluctuations.

Going forward, she explained the crop revenue insurance with the help of two scenarios –

without harvest price option and with harvest price option. In the first scenario, the revenue

losses occurring due to difference in base price and harvest price are covered and in the

second scenario loss payment is done through multiplication of yield deficit and harvest

price. She pointed out the main difference between American and Indian market as the

dependence of American market on the future price of the commodity instead of MSP as is

done in India. She also mentioned that involvement of government in the insurance process

in very strong in USA.

She then elaborated on the case study of Brazil and said that indemnity insurance is most

famous and revenue insurance is only on pilot basis in Brazil. In addition, the insured area

has increased almost 70 fold between 2005 and 2011 due to the active involvement of the

government and subsidies provided in the premium rates of the insurance. She also

mentioned that farm income insurance was introduced on pilot basis by a private player

which was not much successful. Highlighting the reasons she said that subsidies were not

provided by the government and pointed towards the absence of good future market as a

cause of the poor acceptance of the scheme.

Ms. Kannan concluded her presentation by listing the bottlenecks in the successful

implementation of the revenue insurance as unavailability of good yield data, independent

price data and unavailability of futures market data.

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Panel Discussion:

The technical session was followed by the panel discussion on the topic Farm Income Insurance: Evolving Implementation Framework. The panel discussion was chaired by Dr. Dalip Singh, IAS, Additional Secretary of Agriculture, Department of Agriculture and Cooperation, Government of India Government of India. The members of panel were Shri. Raj Kumar, IAS, Principal Secretary, Agriculture and Co-operation Department, Govt. of Gujarat; Mr. P. J. Joseph, Chairman-cum-Managing Director, AICIL; Mr. P.C. James, Chair Professor, National Insurance Academy, Pune; Prof. Gopal Naik, Professor, Indian Institute of Management, Bangalore; Mr. Mohini Mohan Mishra, National Secretary, Bhartiya Kisan Sangh.

The panel members had detailed discussion on structure of the agriculture production &

agriculture market in India and risk management in case of both yield risk and price risk. The

panel members brainstormed upon the constraints in executing the existing agriculture

insurance scheme effectively. Further, the need of Farm Income Insurance Scheme was

emphasized and implementation framework of the scheme was discussed in detail.

List of Panel Members

Name Organization Designation

Dr. Dalip Singh, IAS Department of Agriculture and Cooperation, Government of India

Additional Secretary of Agriculture

Shri. Raj Kumar, IAS Agriculture & Co-operation Department, Government of Gujarat

Principal Secretary

Mr. P. J. Joseph Agriculture Insurance Company of India Limited

Chairman-cum-Managing Director

Mr. P.C. James National Insurance Academy, Pune

Chair Professor

Prof. Gopal Naik Indian Institute of Management, Bangalore

Professor

Mr. Mohini Mohan Mishra

Bhartiya Kisan Sangh National Secretary

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Presentation by Shri. Raj Kumar, IAS, Principal Secretary, Agriculture and Cooperation Department, Government of Gujarat

Shri. Raj Kumar kicked off the panel discussion with highlighting that every farmer should get a remunerative price for his produce. And insurance products should be seen in the light of facilitating such goal for farmers. Every farmer should be viewed as involved in a micro-business and if any business can’t earn sustainable profits, it can never continue beyond some time. For India, food security is not only a very significant element from the viewpoint of the country itself but also from the perspective of stability in global food prices. Hence, given the size of our population, the onus of ensuring food supplies lies with the farmers. Laying the groundwork here, he moved on to give insights into the structural format of agriculture as a sector and agriculture markets.

Mr. Kumar stated that almost 80% of Indian farmers are small and marginal ones having less than 2 hectares of arable land. The decision of choosing a crop by a farmer is taken by him only with a consideration of past prices and hence is subject to unpredictability. He further mentioned that the prices of most agricultural inputs such as seeds, tools, etc. are market driven. Almost all the time, farmers are at substantial odds with appropriate short term working capital coverage through formal channels, which inadvertently lead the farmers to go to a money lender who charges sometimes even more than 25% interest. This fact itself throws a spanner in the working of agriculture as a micro-business as opposed to that in the most developed nations. He emphasized the coverage of various government schemes such as Kisan Credit Card (less than 50%). He further added that the current insurance schemes such as National Agricultural Insurance Scheme, which mainly deals with yield risk doesn’t

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have much coverage. In Gujarat itself, only 25% farmers were covered under NAIS last year.

Mr. Kumar moved further to the topic of agriculture markets. Though he was appreciative of Minimum support price as installed in place by Govt. of India across 24 crops, he pointed out about its lack of uniformity in its coverage of crops and various regions of the country. The small and marginal farmers, he added to the topic of informal money lending business, face a lot of issues especially after obtaining a loan with exorbitant interest rates. Even the reform such as amendments of APMC Act has not able to ensure better price realization by the farmers. He enumerated initiatives such as contract farming, direct marketing, terminal marketing, etc. which have been formed to tackle such issues. Another such initiative is through Warehousing Development and Regulatory Authority, where farmers can store their produce in accredited warehouses and get loan up to 70% of the cost of their produce from the banks after showing necessary Negotiable Warehouse Receipts (NWR). Thereafter, when the market prices are up to the farmer’s expectation, the produce can be sold in the market. At this point, Mr. Kumar requested central government to study the outcome of APMC reform initiatives across the nation.

Another intervention, he delineated, is the Farmers Producer Organizations (FPOs) introduced by Small Farmers Agribusiness Consortium, the goal of which is to improve the network and thus the bargaining power of farmers in the agricultural market. However, he cautioned that the time which the uptick in FPOs might take, given the fact that about 50% of the total population of the country depends on the agriculture, can be much more than what India urgently can afford. He summarized his findings with his belief that if the farmer as a producer needs to be strengthen; it has to be done by consolidation and empowerment.

Along the direction of FPO, Mr. Kumar proposed the idea of Dynamic Farmers Groups. He added that through Crop Insurance Schemes, the information of the name, type and location of the crop sown by a particular farmer is recorded, a dynamic group of farmers can be formed in contiguous areas till the time the crop is sold in the market. Such group will be in-charge of deciding upon the final price of their produce which will be offered in the market. He further pointed out various mobile media social groups, such as “WhatsApp”, can be used to command such group dynamics, given such a high cellphone/ smartphone penetration in India. The decision of warehousing and other paraphernalia can also be better supported through such group synchronization. According to him, not only will such consolidation of farmers will allow better bargaining power but also improve trading opportunities on commodity exchanges such as MCX and NCDEX.

He mentioned that fertilizers are also over-used a lot of times, hence if a mechanism can be

evolved to connect Soil Health Card with the fertilizer usages and AADHAR-based cash

transfer of fertilizer subsidies, a database can be prepared with an estimation of areas and

associated agricultural production. Alongside, using this channel of information Dynamic

Group of farmers growing same crop could be formed in the given region/area. In addition

to the APMC, farmers groups sell their aggregated produce on electronic trading platforms

as well. He held his firm belief in the potential of FPOs and dynamic groups of farmers to

lead towards higher bargaining power of farmers and added that pilot of farm income

insurance scheme should be undertaken with FPO/Dynamic Group of Farmers. It will lead to

price transparency, which will go a long way in reducing the risks of insurance firms. He

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suggested therefore, for the panel members and other stakeholders, not to look at agriculture

insurance as a standalone product, but as a business and evolve suitable mechanism to deal

with the challenges.

Presentation by Mr. P. J. Joseph, Chairman-cum-Managing Director, AICIL

Mr. Joseph started off with his view by delineating

the agenda of his speech as to present the

perspective of insurer when it comes to crop

insurance schemes in India. He said that Crop

insurance is a commercial activity and hence

should be profitable in the long term whether it is

revenue insurance or yield insurance. Unlike

other insurance, in case of crop insurance there is

an important role played by the government. He

warned that the basic problem which we have

with yield insurance will continue to play in

revenue insurance unless the problems are set

straight, such as yield assessment which is not

done very rigorously till now. He further indicated

that revenue insurance had its own problems as

explained by the speakers before, such as the lack of robust commodity market, delay in

getting yield data from government, delay in calculating the losses by the insurance firms

etc. Today there is a lot of dissatisfaction among farmers with respect to insurance schemes

and to ensure that these do not continue for the new insurance scheme as well, he

emphasized to set the issues straight.

Presentation by Mr. P. C. James, Chair Professor, National Insurance Academy, Pune

Mr. James highlighted the role of agricultural insurance as significant in the Indian context

since about 50% of the population depends on agricultural income directly or indirectly.

However, he remarked, agriculture insurance is relatively new concept and it is a noteworthy

fact that in the last few years, agriculture insurance companies have dramatically reduced

risks, such as risks related to insuring groundnut production have come down from a cost of

around 25% to 9%, cotton from 17% to 8%, etc. He added that the expenses of agricultural

insurance companies have also reduced to 2% when compared with other insurance sectors.

All of these are helping farming community to ensure a much more affordable price than

before. He further indicated that since farmers are not able to spend time in paperwork, the

insurance plans have now been prepared to take such issues into consideration.

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However, he cautioned that agricultural insurance is a difficult subject to deal with because

of systemic risk associated with the sector. There is a need to measure many things along

with the presence of too many stakeholders and in addition there is not much discipline in

the measurement of correct information and data. He again warned about including systemic

price risk when evolving the new insurance scheme on the top of yield risk which itself has

associated systemic inclination.

He summarized the crux of insurance conundrum with the question “Who will bear the cost

of risk?” which ultimately, he said, leads to the policy holder but in process the problem is

also shifted to the insurance companies, the government or some other agency. Ultimately,

the end is not sustainable unless the cost of risk is properly understood and reduced before

new insurance schemes are adopted. He further added that the government might have to

come forward with a definitive plan to give accurate results with an authority to determine

the forward price so that speculators do not take advantage by defrauding the farmers and

insurance companies.

Mr. James then moved on to talk about the prices that have certain but unpredictable boom

and cycles year after year, which leads us to the question of bearing the cost of such a long

duration systemic price risk. He summarized his speech by exhorting all participants that the

time is ripe now to look at price risk but it will require huge amount of resources in research,

studies, and government intervention on which the only hope is to go ahead but with caution.

Presentation by Prof. Gopal Naik, Professor, Indian Institute of Management, Bangalore

Prof. Naik started off his discussion with the remark that current farm income insurance

should be used as an alternative to the existing risk management mechanism. As he further

explained, when farm income insurance was first introduced, he himself was very closely

involved in it and in fact he made the first presentation in the Prime Minister’s Office. The

requirement of that time was

There was 60 million tonnes of foodgrains to tackle

The cost of carrying these was INR 20,000 crores, because of which it was highly

desirable to reduce the burden on the government in order to make sure that there is

a less procurement for foodgrains and therefore alternative policy regimes could be

thought of.

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However, as he recalled, it did not have much

importance in the next two years of droughts

subsequent to the introduction of farm income

insurance, due to which the government stocks

were liquidated. Hence, Farm income insurance

was casted off and other alternatives were

looked for. He then posited that if the same

situation, without the droughts, had continued

in terms of stock building India probably would

have continued with farm income insurance

starting that time itself.

Prof. Naik briefly explained how such insurance

scheme can be implemented in the present

times. He initiated his views on the new

insurance scheme with the need for designing

the scheme in the context of technology revolution and the infrastructure and other support

sub-systems that we have today. He proposed, as a case, moving to a cost-plus income

assurance level and using the one that can come up with a level of income that can be assured

to the farmers. The “plus” could be anywhere form 0-15% depending on the situation and

current stock of a commodity. He further emphasized the importance of better data

collection while quoting Shri. Raj Kumar that for any of the insurance products to be

introduced, the data integrity is of utmost importance. He then pointed towards a case study

done by him in Karnataka where it was found that not only the survey number of the farmer

is important but also every plot within the survey number hold a lot of significance. His team

measured almost 75000 plots from one gram panchayat and showed in the study how

government recorded data are different than what actually prevails on ground.

Prof. Naik further emphasized that there is a need to treat the farm income insurance as one

product among several product such as weather based crop insurance, MNAIS, etc. These

serve different crop system and different areas, such as, in irrigated systems there is no need

for yield insurance because yield is more or less stable. Hence, he mentioned that weather

based insurance will be more useful where yields are highly related to a single weather

parameter. Therefore, not only alternative insurance products should be developed but also

other associated systems, e.g. data integrity, data collection systems, agricultural marketing

system, warehousing system need to have full accountability.

He showed an example of interrelationship between various activities in the farming in the

form of agricultural extensions. He then exclaimed that if the extension is weak, the

associated risk goes up, raising the level of insurance premium, due to which many farmers

might not opt for such insurance scheme. Hence, unless other sub-systems in the agriculture

sector have been taken care of, it will not be possible to make any insurance scheme a viable

product. Prof. Naik then moved on to show an example in the form of his project where data

from insurance sector and agriculture extensions i.e., information and input supply together

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can be consolidated so as to reduce the systemic risk and help farmers in opting for

appropriate insurance schemes as well as in improving the yield because of extension

effectiveness. If, he mentioned while concluding his address, we are able to create a system

where various interlocking contracts between insurance companies, input suppliers and

extension agencies can be leveraged, we might be able to help farmers in selecting

appropriate insurance scheme and reduce risk which will also help insurance companies in

providing viable insurance schemes effortlessly and efficiently.

Presentation by Mr. Mohini Mohan Mishra, National Secretary, Bhartiya Kisan Sangh

Mr. Mishra started off his discussion with a

caution that about 42% farmers are ready

to opt out of agriculture as of now. India

has a population of 125 crore which needs

to be fed and obviously import will also fall

short of covering this huge population. He

then rhetorically asked the way out of the

increase of input costs and the unregulated

markets. Hence, out of the several

questions that may be asked today, as he

declared in the direction of insurance

schemes in place, one is how to insure mixed cropping option where different crops have

different harvesting periods and acreages. Overall, he emphasized that there is a high

diversity in terms of weather, crop patterns and soil content across the nation. Though the

inputs from the farmers are homogenized from government’s side in a way to aim towards

assured income for farmers, he proposed to add the considerations of risk such as drought,

flood and other factors in the minimum support price (MSP) which will obviate the need of

insurance altogether, at least in major crops such as wheat, rice, etc. He further added that

we can also include the option of announcing of government procurement twice, once after

the harvesting season and secondly just before the next harvest, along with little monetary

incentive in place to the farmers to save crops in their own storages and go-downs for the

procurement before next harvest season, which will also help reduce the burden on the

government warehouses.

Mr. Mishra then highlighted a crop holiday in 2010-11 announced by the farmers on 1 lakh

hectares in Andhra Pradesh, on which he remarked that the problem was related to lack of

procurement and storage facilities from the farmer’s side. He underlined the emergent need

to think about the issue with the farmers’ side taken into consideration and the need to

rethink about this issue from the point of view of every stakeholder. Because, ultimately

what we want is the sustenance and satisfaction of the farmers from agricultural income. Mr.

Mishra further supported the implementation of Dynamic Farmers Group as pointed out by

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Shri. Raj Kumar to increase bargaining power of farmers but he claimed that the

implementation of this initiative will mostly be successful in Gujarat, Maharashtra and

contiguous areas and not in other parts of the country.

He further proposed to enact direct fund transfer from Natural Disaster Funds to the affected

farmers since most issues related to yield fluctuations are caused by natural disasters and

calamities. Hence, insurance schemes aside, aforementioned steps can be taken towards

reducing the challenges and issues in agriculture.

Concluding Remarks by Dr. Dalip Singh, IAS, Additional Secretary of Agriculture, Department of Agriculture and Cooperation, Government of India

Dr. Dalip Singh, Secretary to Govt. of

India, while concluding the panel

discussion extended his gratitude to the

organizers of the seminar and Shri. Raj

Kumar, Principal Secretary, Govt. of

Gujarat, for his enthusiastic support

towards the topic of the seminar. He

further thanked Mr. Kumar, especially

for the invitation extended to Govt. of

India and expressed his pleasure in

attending the seminar. Dr. Singh started

off with his views about the insurance

schemes by summarizing that the

participants of the seminar have talked about farmer insurance schemes where mostly the

production is insured and if, in case of any unforeseen reason, the prices of certain produce

rise up, current insurance mechanisms are not fully in place to tackle such issue. He further

stated that in 2003-04, the scheme Famers Income Insurance Scheme (FIIS) was

incorporated, but was discontinued after 2-3 harvest seasons. The reason, he declared, was

increasing difficulty in continuing with the scheme due to spike in insurance premiums and

unpredictability of the agriculture commodity prices which has relations mostly with the

demand and supply of the commodity and is almost independent of the farmers or the

government consensus. He further showcased the enactment of a new scheme, Modified

National Agricultural Insurance Scheme (MNAIS) which was put forth in 2013 after taking

into consideration past experiences and viewpoints of various states. MNAIS was put into

operation across the nation except in 5 states, including Gujarat. He mentioned that the

Central Government received suggestions from the other 5 states on which there was a

meeting with Agriculture Secretaries from these states on 14th of August, 2014, in which Shri.

Raj Kumar was also present. Dr. Singh further asked the audience and the participants to first

understand the novel and effective ideas put forward in the new scheme, MNAIS rather than

figure out a completely new one. The high-level discussion, as he indicated, led to the

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conclusion that the premium under MNAIS (5% - 10%) has been increased as compared to

earlier scheme (1.5% - 3%), which he termed as understandable but to discard the scheme

without considering its other merits will not be helpful in the long run. He emphasized the

significance of MNAIS as a huge scheme in itself especially juxtaposed with over 25% of the

Indian Government budget earmarked only for insurance schemes. In addition to the

insurance premium paid by central and state governments in earlier schemes, the

consideration or claims during any calamity also used to be paid by the central and state

governments. In this backdrop, Dr. Singh expressed his satisfaction about the MNAIS that the

regular insurance premium has to be paid by Govt. of India, the state governments and the

farmers while the compensation and claims will be paid by the insurance companies, which

now included 10-12 private companies as empaneled by the central government.

In conclusion, Dr. Singh underlined his belief that every stakeholder needs to work on the

challenges of the MNAIS and then bring the modified version or if needed a new insurance

product into the market.

Question and Answer Session

In the Q&A session, there were some suggestions from the farmers such as:

When FCI procures

certain product, INR 700-750

are paid upfront during

registration as the

procurement charges, which

means and increase in

ultimate cost by this amount.

Government should have a

staggered purchase, such as

incentivizing farmers for

procurement after the

harvest season such as in

June for wheat (as opposed to the harvest time, i.e., April and May). There are two

benefits of such staggered purchase – increase in farmers’ income and creation of

rural warehouse facility on a mass scale among groups of farmers.

Another suggestion was to add 10-15% over the top of MSP (Minimum Support Price)

since currently farmers have an incentive to involve themselves in managing and

fudging the data collected by the insurance companies, which leads to the lack of

reliability in such data. In addition, there is a need for policy actions to incorporate

farmers’ consensus into consideration while allowing them income commensurate

with their hard work.

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Conclusion of the Panel Discussion

The panel discussion was successful owing to emergence of a clear consensus among the participants. The importance of agriculture sector in India can be gauged by the fact that 50% of the population is dependent on this sector directly or indirectly for its livelihood. In addition, the food grains need of our country, given the population of 1.25 billion, can never be completely met by imports. Another contrasting fact among Indian farmers as opposed to other developed nations is that about 80% of the Indian farmers are small and marginal ones rendering the acreage highly fragmented. The numerous initiatives which have been formulated and subsequently operationalized to tackle the issue of assuring steady income for farmers include Kisan Credit Cards, Soil Health Cards, Farmers Producers Organization, facilities of accredited warehouses by Warehousing Development and Regulatory Authority, Minimum Support Price, etc. However, with a perspective that all these initiatives have been limited in their penetration, there is a clear need felt for across the board agricultural insurance. Modified National Agricultural Scheme, which has come up to tackle and fill up the gaps in terms of farmers income was ratified by all but 5 states, including Gujarat, the primary reason for which was the increased rate of premiums as opposed to that in the insurance schemes in place earlier.

The participants agreed to introducing measures so as to consolidate the farmers in some ways in order to increase their bargaining power in the market. Another direction where a clear consensus emerged was on the topic of data integrity. The data on which the government as well as the insurance companies base their rates, as Prof. Gopal Naik and Mr. Mohan Mishra affirmed were at odds with what actually prevailed on ground. Hence, the discussion had an undertone to evolve the solutions to the issues along the direction of yield insurance schemes in place, before venturing into the realm of price insurance. Another solution which emerged to tackle some of the problems related to existing insurance schemes was to incorporate staggered procurement by the government through Food Corporation of India, Ltd. with monetary incentive to the farmers for creating their own storage facilities. This not only will help reduce the burden on government warehouses, but also will strengthen the bargaining power of Dynamic Farmers Group, a term coined by Shri. Raj Kumar during the panel discussion.

From the perspective of insurance companies, there was a palpable demand expressed for government support in bearing the cost of insurance both in terms of the premiums and the claims associated. Mr. James underlined the importance of understanding that prices have certain but unpredictable boom and bust cycles. Another salient opinion expressed from the insurance camp was that the systemic risks associated with the current yield insurance schemes in place, might be compounded due to the addition of risk associated with price insurance.

Conclusively, all panel members were of the opinion to introduce some measures in the

current agriculture market to boost the bargaining power of farmers using commodity

market and social media. In addition, most reflected a need for not only understanding but

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also tackling the issues with the current yield-based insurance programs in place, before

moving on to evolve price-based insurance schemes. The discussion was made livelier with

the cases of Farmer’s holiday, Agricultural extensions, etc. introduced by the members and

ended in a positive note for paving the way ahead for new Agriculture Insurance scheme.

After the conclusion of Q&A session, memento was offered to the speakers:-

Dr. S. R. Chaudhary, Director of Agriculture, Govt. of Gujarat honored Mr. B. S. Rahul,

Deputy General Manager.

Dr. N. K. Singh, MD, GAIC honored Shri. Raj Kumar, IAS, Principal Secretary,

Agriculture and Cooperation Department, Govt. of Gujarat with a memento for his

contribution towards the successful completion of the seminar.

Dr. K. S. Detroja, Managing Director, Gujarat State Land Development Corporation Ltd.

was called upon the stage to do the honor of felicitating Mr. Malay Kumar Poddar,

Chief Financial Officer, Agriculture Insurance Company of India Ltd., New Delhi.

Mrs. K. B. Chaya, Joint Director of Agriculture was called upon the stage to do the

honors for Ms. Harini Kannan, Head – Agriculture amidst a round of applause.

Mr. B. M. Modi, MD, BSSC was requested to do the honors of felicitating Mr. P. J. Joseph,

Chairman and MD, Agriculture Insurance Company of India Ltd.

Mr. D. V. Barot, Addl. Director of Agriculture, Govt. of Gujarat was welcomed on stage

to extend honor with a memento to Mr. P. C. James, Professor.

Mr. S. J. Solanki, Joint Director of Agriculture, Junagadh Govt. of Gujarat was called

upon the stage to do the honors for Prof. Gopal Naik, IIM Bangalore.

Mr. K. S. Detroja, MD, GSLDC was called upon to felicitate Mr. Mohini Mohan Mishra,

Bhartiya Kisan Sangh, amidst a round of applause.

Mr. Prakash Rabari, Joint Director of Agriculture, Government of Gujarat, was

requested to felicitate Mr. Dalip Singh, Principal Secretary, Govt. of India, amidst a big

round of applause.

In order to conclude the seminar, Mr. N. K. Singh, MD, Gujarat Agro Industries Corporation

Ltd. was invited to the dais for the vote of thanks.

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Vote of Thanks by Dr. N. K. Singh, Managing Director, Gujarat Agro Industries Corporation Limited

Dr. Singh concluded the seminar

expressing his views on Farm Income

Insurance. He regarded it as a complicated

subject in which the major consideration

should be to assure the income of the

farmers after which the issue

automatically would reduce to a much

simpler problem. He highlighted Mr.

Mishra’s view on the issue in terms of

stabilizing the minimum support price

(MSP) or basically the farm income, rather

than relying completely on the insurance

industry for managing the challenges of

agricultural sector.

He specially thanked Shri. Radha Mohan Singh, Hon’ble Union Minister of Agriculture and

Smt. Anandiben Pater, Hon’ble Chief Minister of Gujarat for gracing the event. He further

expressed his gratitude towards Shri. Babubhai Bokhiria, Hon’ble Agriculture Minister of

Gujarat; Shri. Nanubhai Vanani, Hon’ble Sports Minister of Gujarat; Shri. Bhupendrasinh

Chudasma, Hon’ble Minister of Education and Food & Civil supplies, Gujarat; Shri.

Pradeepsinh Jadeja, Hon’ble Minister of Law, Gujarat and Shri. Kantibhai Gamit, Hon’ble

Minister of Tribal development, Gujarat. He further thanked the participants from

Department of Financial Services, Ministry of Finance and Reserve Bank of India for showing

their interest in the subject. He also thanked Representatives from Government of India,

Secretaries of states Agriculture department, Directors of Marketing Boards and government

& private insurance companies for their support. He also appreciated participation from

nationalized banks, co-operative banks, Gramin Banks, farmers’ organization, APMCs,

insurance policy experts, industry players and academicians. He also extended his gratitude

towards Bhartiya Kisan Sangh and progressive farmers for the active participation.

Appreciating the contribution of Dr. Dalip Singh, IAS, Additional Secretary of Agriculture,

Government of India, he said that his guidance will surely help move forward in the right

direction towards insuring farm income.

Moving forward, Dr. Singh thanked the organizing committee from Agriculture and

Cooperation Department for making this seminar such a huge success. Dr. Singh expressed

special gratitude towards Shri. Raj Kumar, IAS, Principal Secretary, Agriculture and

Cooperation Department, Government of Gujarat, for his constant support and guidance. He

also extended his special thanks to the Knowledge Partner (KPMG) and Event Partner

(Radeecal Communications) for their constant support.

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Summarily, Dr. Singh emphasized that the aim should be to insure the income of the farmer

and he extended the idea of farm income insurance as one of the tools for the assuring income

of the farmers.

Following the vote of thanks, the farmers were briefed about KCC (Kisan Credit Card) and

the process of applying online for insurance was explained in detail by the representative

from NIC (National Insurance Company).

Way Forward

The event concluded on a high note with an aim to work towards ensuring remunerative income of the farmers. The need of the framework for implementing the Farm Income Insurance Scheme was stressed upon. It was suggested that the bargaining power of the farmers can be increased through formation of Farmer Producers Organization (FPO) and Dynamic Farmers Groups. Learning from the experience of Pilot FIIS, it was emphasized that the new scheme should be implemented on group basis rather than on individual basis.

It was indicated that the attempt should be such that the risks are borne equally by all the

stakeholders. It was also suggested that the new Farm Income Insurance Scheme should be

attractive enough to be accepted widely. And above all, it was emphasized that the aim should

be more towards assuring famers’ income than insuring of farm income.