Vulnerable India 8: Weather advisories need a human interface, and crop insurance needs a makeover

Both need stronger partnerships with non-government actors

The plight of India’s poor farmers is poignantly highlighted by the suicides that continue to take place each year. Over 300,000 farmers have taken their lives since 1995 due to a combination of factors including crop failure due to climatic factors or pests, failed technology, low profit margins, and/or debt. More effective risk management and transfer mechanisms are urgently needed – and this need is  likely to heighten as the climate becomes even more variable.

Before moving on to exploring lessons from other rural sectors for climate change policy making in India, I would therefore like to take a brief detour to explore India’s experience with two such risk management and transfer mechanisms: agrometeorological or “agromet” services, and crop insurance.

Weather advisories need a human interface

Timely weather advisories can prove highly beneficial to farmers. A 2010 report by India’s National Council for Applied Economic Research (NCAER) estimated the economic benefits of these advisories, then reaching only 24% of India’s farmers, at ₹50,000 crore (500 billion, or approximately US$ 50 billion) annually. If the entire farming community in India benefits from these services, NCAER estimates the annual benefits could increase to ₹211,000 crore.

The Integrated Agromet Advisory Service (IAAS) was launched in 2007 to provide weather information for crop and livestock management to farmers. One automatic weather station was set up in each of the 100 districts, to provide twice-weekly advisories. IAAS was limited in its reach and coverage – each district covers 400-500 villages, often with many “sub-climates”, and forecasts were possible for up to only ten days.

The service had some successes. For instance, in 2011 Orissa suffered a severe drought, followed by floods. Farmers with access to the advisories did not sow during the drought and grew winter crops to benefit from the floods. It also had failures. Andhra Pradesh also suffered a heavy drought in 2011, for instance, but the advisories failed to reach farmers in time, leading to massive crop loss.

Last year, under the Twelfth Five Year Plan, IAAS was re-launched as the Gramin Krishi Mausam Sewa (GKMS), with the intention to scale the service down to the block and village level.

It is not only the lack of technology or resources that restricts farmer access to these advisories, however. Experts say a ‘human face’ is needed to improve the information they provide. “The advisory is prepared very subjectively and the experience of the scientists which could determine the best practices possible in a stresses like drought are not included,” says K.K. Singh, Head of the Agromet Division of the Indian Meteorological Department. “Farmers may not get the information and even if they do, they may not understand how to adapt their practices.” Singh considers better communication between scientists and farmers a critical element in the success of weather advisories.

Non-government organisations (NGOs) appear to have better success in providing this human interface. The Watershed Organisation Trust (WOTR) works in 29 villages in Maharashtra, disseminating and explaining agromet information to the farmers, and building local capacity building by training young residents to read and interpret advisories. The NCAER report also notes the important role for NGOs, Village Resource Centres, and Village Knowledge Centres in the much more successful advisories for fisherfolk, which reach out to 90% of the fisherfolk population in some southern coastal regions.

Crop insurance needs a makeover

India has experimented with crop insurance for over 25 years, but coverage remains low – only a fifth of the cropped area is covered. Small and marginal farmers rarely participate in, or benefit from, such insurance.

The Ministry for Agriculture currently runs three insurance schemes covering 25 million farmers: the National Agriculture Insurance Scheme, (NAIS) initiated in 2000; the Weather Based Crop Insurance Scheme (WBCIS), introduced as a pilot scheme in 2007; and the pilot Modified National Agriculture Insurance Scheme (mNAIS), introduced in 2010.

NAIS is based on a “homogenous area based yield approach”. Insured farmers are compensated if ‘crop cutting experiments’ in a reference unit area show that the yield is lower in the given year, than over a period of 3-4 years. The size of the reference unit is decided by state governments and is mostly a district. The problem with this approach has been that only losses over larger areas are covered, and localised damage that has not hit other parts of the ‘unit’ are missed out. Farmers with legitimate cause are not compensated – for instance, if a hailstorm causes damage only to one village. Moreover, the crop cutting experiments take time, up to 9-12 months, and farmers are not compensated in time for the next planting season.

WBCIS eliminates the need for establishing crop loss through such experiments by compensating on the basis of a weather-based index that indicates conditions for crop loss. Payouts can be made faster, the insurance contract is more transparent, and transaction costs are lower. However, the potential of the scheme is limited by the lack of infrastructure, more specifically automated weather stations. According to an evaluation of WBCIS, the biggest grievance among farmers is the location of weather station, which affects the potential of the scheme to assist them in their rights to claims. The lack of grievance redressal mechanisms, and convenience in enrolling in the scheme are also identified as key problems (see figure below). Another disadvantage is that the scheme does not cover losses through non-weather related events, such as pest attacks or technological failure. For instance, the scheme did not cover the massive losses incurred by farmers in Bihar when, in 2009, they cultivated the Cargill hybrid 900M maize seed provided by Monsanto India Limited and it turned out to be a failure.

Figure: Why farmers are not satisfied with WBCIS

Screen Shot 2014-11-12 at 08.38.46Private sector banks are allowed to participate in the WBCIS – ICICI Lombard has a weather-based scheme based on information provided by the Indian Meteorological Department. Private sector involvement in agricultural insurance can help provide a more efficient delivery mechanism, but continues to be limited due to the high level of risk and the high premiums. Such public-private partnerships can make public sector involvement more viable.

mNAIS was introduced in 2010 as a pilot in 50 districts in India, and aims to address the deficiencies of NAIS by calculating insurance claims on the basis of crop loss at the Panchayat, rather than district, level. Farmers are skeptical of the extent to which this will address their concerns – unions such as the Bharatiya Krishak Samaj prefer a scheme that covers losses at the individual level.

The schemes still remain largely inaccessible to small and marginal farmers, despite a 10% premium subsidy for them. A survey carried out in 2008 showed that the premiums were considered too high by 70% of farmers – particularly since they run a high risk of not being able to settle claims. In fact, the schemes are disparagingly referred to as “loan insurance schemes” because they are compulsory for farmers who wish to avail of institutional credit. Sometimes, farmers were not even aware that premiums are automatically deducted from their loan paybacks.

Innovations such as “insurance for work” approach pioneered by Oxfam in Ethiopia will be important to promote insurance among poor farmers in India. Under this approach, farmers have the option of working on community projects, such as planting trees or constructing a water harvesting structure, to pay for their premiums.

Many poor farmers are not aware of the existence of insurance schemes. NGOs like Oxfam India and Sajjata Sangh are working on informing farmers and helping them get their payouts. In Andhra Pradesh, an organisation called BASIX has ‘Livelihood Services Agents’ carrying out this role. Once again, a human interface between the service and farmers is a key element in its success, and non-government actors play a critical role in innovating to provide this interface.

Lessons for climate change

The experience gained by agromet advisories and crop insurance schemes in India should inform future action under the National Mission on Sustainable Agriculture (NMSA), part of India’s National Action Plan for Climate Change. In addition to scaling right down to the village level, such services should encourage stronger interaction and better communication between scientists and farmers; focus on knowledge and training centres at the village level; form strong partnerships with NGOs and the private sector; and innovate to reach out to the majority of India’s farmers who are too poor to afford even subsidised premiums.

Written with inputs from Vidhu Tyagi.

This entry was posted in Agriculture, Climate change, Climate Change, India, Insurance, Poverty and tagged , , , , , , , , . Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s