MSc

Agriculture in India has become an inherently risky venture due to uncertainty in production and price volatility of agricultural commodities triggered by increased climatic aberrations and globalization. Hence, crop insurance plays an important role in stabilizing farm income, ensuring credit flow in agriculture and decreasing over dependence on public exchequer for relief measures. Various insurance products along with stringent measures to enforce them were taken to enroll the maximum number of farmers in crop insurance. In spite of all these efforts, the adoption rate of crop insurance was still low and Kerala is one of the states with lowest growth rate of voluntary subscription of crop insurance.


With this background, the present study was undertaken to analyse the performance and progress of crop insurance schemes in Kerala, estimate the impact of crop insurance on paddy cultivation, assess the viability of crop insurance schemes, identify constraints in the adoption of crop insurance and estimate the willingness to pay for crop insurance schemes.


The study is based on both primary and secondary data. The time series data on area, production and productivity of rice in Kerala and Palakkad district from 1980-81 to 2017-18 was analysed. It was found that the area and production exhibited a decreasing trend whereas productivity showed an increase over the years. Primary data was collected from 180 selected farmers of Palakkad district using pretested interview schedule by personal interview method.


Time series data on the area insured, number of farmers insured, gross premium collected and claims settled for a period from 2002 to 2019 were collected from the Directorate of Agriculture, Government of Kerala. From the analysis, it was observed that the crop insurance coverage also displayed an increasing trend. The distribution of crop insurance subscribers during Kharif 2017 and Rabi, 2017-18 highlighted the fact that more than 97 per cent of the subscribers were borrower farmers suggesting that the growth in subscription was attributed to bundling of insurance schemes with crop loans. The claims to premium ratio, which should ideally be less than one, showed a cumulative average of 1.31 for the period under consideration and reflected the un-sustainable nature of the design of crop insurance products.


The cost of cultivation of paddy in the study area was found to be ₹78,819/ha and the major constraint faced by the farmers in crop production was inadequate supply of irrigation water. The other constraints encountered were excess growth of weeds, delay in procurement and abrupt weather changes. The most preferred method of coping with income variations was availing gold loans and the major reason for subscribing to crop insurance scheme was compulsory enrolment. Delay in settlement of claims, inadequate compensation and dissatisfaction with area based approach were the major constraints in voluntary adoption of crop insurance schemes.


Logit regression model was employed to ascertain the factors affecting voluntary subscription of crop insurance programmes using gross cropped area, education, income, cost of cultivation and farm experience as independent variables. Levels of education showed significant influence over the decision of voluntary adoption of crop insurance schemes. The odds of a farmer with graduate level of education, that he subscribes to crop insurance voluntarily than due to compulsion, was found to be 16 times higher compared to a farmer with primary education.


The Willingness To Pay (WTP) for a crop insurance scheme with features of timely settlement of claims, usage of drones and satellite imageries for crop loss assessment and claims based on procurement price of the produce was elicited using single bounded contingent valuation method. The WTP was estimated to be ₹1753/ha using probit model employing maximum likelihood method. The suggestions for improving the existing crop insurance schemes were identified and ranked. Majority of the farmers assigned first, second and third ranks respectively to timely settlement of claims, ensuring adequate compensation and introducing individual coverage.


Ensuring claims based on procurement price of the produce; using drones, satellite imageries and other advanced technology for quicker crop loss assessment and implementing schemes based on individual coverage are recommended to address the constraints faced by farmers in adopting crop insurance. Administering the crop insurance schemes through Krishi Bhavans will make it easier for the farmers to have access to information related to the schemes as they are more acquainted with KBs than banks. The farmers’ share of premium may be raised as high as ₹1753/ ha with the suggested improvements over the existing schemes.