Weather Based Risk Management Tool to Mitigate the Farming Risk in India (original) (raw)
Related papers
Agricultural Insurances Based on Meteorological Indices: Realizations, Methods and Research Agenda
papers.ssrn.com, 2011
In many low-income countries, agriculture is mostly rainfed and crop yield highly depends on climatic factors. Furthermore, farmers have little access to traditional crop insurance, which suffers from high information asymmetry and transaction costs. Insurances based on meteorological indices could fill this gap since they do not face such drawbacks. However full-scale implementation has been slow so far. In this article, we first describe the most advanced projects that have taken place in developing countries using these types of crop insurances. We then describe the methodology that has been used to design such projects in order to choose the meteorological index, the indemnity schedule and the insurance premium. We finally discuss for the main research issues. In particular, more research is needed on implementation, assessment of benefits, how to deal with climate change, spatial variability of weather and interactions with other hedging methods.
Meteorological Applications, 2013
In many low-income countries, agriculture is mostly rainfed and crop yield highly depends on climatic factors. Furthermore, farmers have little access to traditional crop insurance, which suffers from high information asymmetry and transaction costs. Insurances based on meteorological indices could fill this gap since they do not face such drawbacks. However full-scale implementation has been slow so far.
Innovative Alternatives for Crop Insurance: Rainfall-Index-Based Insurance and Futures
International Journal of Banking, Risk and Insurance, 2021
For mitigating the rainfall risk, there is a need to create hedging opportunities which may provide comprehensive relief to farming communities and other sectors. Crop insurance is one such programme currently being implemented by Government of India. A good number of studies have provided enough evidence of poor performance of crop insurance programme due to factors like delay in compensation, moral hazard, high transaction cost and lack of product knowledge. This paper attempts to reinforce the need for creating rainfall risk market in India to complement the rainfall-index based insurance. The discussion is focused on the development of a new set of rainfall indices. The proposed Deficit Rainfall Days (DRDs) and Excess Rainfall Days (ERDs) indices are different from rainfall indexation attempted by National Commodity and Derivative Exchange (NCDEX) in 2005. Rainfallindex based insurance programme introduced in India in the recent past has met with limited success. By comparing Rainfall-Index Based Insurance with Rainfall-Index Based Futures, the study highlights the necessity and significance of Rainfall Futures to create rainfall risk hedging opportunities for a wide range of stakeholders, particularly farming community.
2010
An evaluation of the crop insurance programme in India through the multi-peril yieldbased National Agricultural Insurance Scheme reveals that while it has done well on equity grounds, the coverage and indemnity payments are biased towards a few regions and crops, and there are delays in settlement of claims. And while the emergence of weather-based insurance as an alternative has addressed several limitations of traditional insurance, it is faced by challenges of a different kind. Both these forms of insurance must thus be looked upon as complementary to each other in order to evolve an efficient mechanism for dealing with natural disaster risks in agriculture. Weather variability and uncertainty of crop yields is a basic risk faced by agriculturalists worldwide. However, the magnitude and intensity of this is particularly high in India owing to extreme dependence of the farm sector on weather conditions and the poor economic condition of the overwhelming majority of farmers who hav...
Agricultural Insurance in India:A Perspective
The on going National Agricultural Insurance Scheme is a good step far ward to insure risk of millions of farmers whose livelihood depends on the pattern and distribution of monsoon rain in India. However, it suffers from some of the major problems inherent in crop insurance programs throughout the world. With this background the paper reviewed the innovative techniques in agricultural/rural insurance, which overcome some of the disadvantages of yield based group insurance and suggests rainfall (weather) index insurance as a better alternative/complement to the existing agricultural insurance scheme. The weather (rainfall) index based insurance is also more compatible with reinsurance practices world wide, which make primary insurers to cover their local/regional risks by reinsuring them selves with international reinsures.
2012
In the Sudano-sahelian region, which includes Northern Cameroon, the inter-annual variability of the rainy season is high and irrigation is scarce. As a consequence, bad rainy seasons have a massive impact on crop yield and regularly entail food crises. Traditional insurances based on crop damage assessment are not available because of asymmetric information and high transaction costs compared to the value of production. Moreover the important spatial variability of the weather creates a room for pooling the impact of bad weather using index-based insurance products. We assess the risk mitigation capacity of weather index-based insurance for cotton growers. We compare the capacity of various weather indices coming from different sources (daily rainfall, temperatures and satellite imagery) to increase the expected utility of a representative riskaverse farmer. We first find that weather index-based insurance is associated with huge basis risk, no matter what the index or the expected...
2003
Crop insurance is an alternative risk management technique available to farmers for stabilizing their revenue risk and schemes based on area yield have been in operation for quite some time. Here rainfall based insurance indices and options are suggested as a replacement for the expensive area yield programs. Instead of direct premium subsidies which are distorting, premium subsidy is taken as a function of adverse deviation of rainfall from the mean. A sensitivity analysis at different revenue elasticity levels with respect to rainfall was performed. Potential for private insurer's and reinsurer's participation exists with rainfall based index and options.
International Journal of Engineering Inventions
Lot of factors, ranging from climate variability, frequent natural disasters, uncertainties in yields and prices, weak rural infrastructure, imperfect markets and lack of financial services including limited span and design of risk mitigation instruments such as credit and insurance have affected Indian agriculture which in turn has affected the farmer’s livelihood and incomes in India. In order to avoid the agriculture risks government and private insurance company are introducing varieties of insurance scheme. These schemes will reduce the financial loss occurred through weather vagaries in agriculture sectors. In the present day’s insurance can be divided into two categories namely Crop insurance and weather index based insurance. The present article mainly focuses on impact assessment of weather index based insurance in Karnataka. The primary data was collected through random questionnaire and the secondary data regarding weather index based insurance of five districts namely Chitradurga, Dharwad, Shimog, Davangere and Tumkur were collected from Agriculture Insurance Company of India Limited. Comparative study was made between these data to know the impact of WIBI on cotton farmers
Prospects of Weather Index-Based Crop Insurance in Bangladesh
International Journal of Agricultural Economics
Agricultural sectors of Bangladesh are frequently affected by natural disasters such as droughts, excessive rainfall, floods, flashflood, heavy fog, earthquakes, storm, cyclones, salinity and landslides. Agriculture or crop insurance is an important method by which farmers can stabilize their income and investment against disastrous effect of losses for natural hazards or low market price of the crops. Crop insurance helps the farmers of developing and under developed countries to initiate production activities after a bad agricultural period. At first, Green Delta Insurance Company has started Weather Index Insurance since 2015 by supporting of World Bank group in Bangladesh. Later on, Sadharan Bima Corporation (SBC) also proposed another new project named 'Weather Index-Based Crop Insurance (WIBCI)'. Agriculture or crop insurance should be based on risk management strategy. The purpose of this study is to implement and further possibility of weather index-based crop insurance in Bangladesh and descriptive method is used to represent the information. The possible result of this study is continuous crops production activities of the farmers after a natural disaster. Bangladesh should have started agriculture or crop insurance system earlier for better output from agricultural sectors.