Crop Insurance: As states exit PMFBY; J&K’s farmers, politicians pitch for a new start

17 August 2021

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Srinagar, Aug 17: As several states, including Gujarat, Andhra Pradesh, Telangana, Jharkhand, West Bengal, Tamil Nadu and Bihar have exited the Pradhan Mantri Fasal Bima Yojana (PMFBY) scheme, citing the cost of the premium subsidy to be bore by them, the centre is taking a fresh look at the scheme and how to make it attractive to states.

In Jammu & Kashmir, the Fasal Bhima Yojana has been a non-starter in the Kashmir region, where bulk of agriculture and horticulture production takes place in the former state. In Jammu region, the Fasal Bhima Yojana has been partially running, with a part of the premium being borne by the J&K government.

However, farmers in Kashmir region and also in some of the mountain districts in Jammu have been constantly seeking a crop insurance scheme that could provide them some degree of protection in the face of adverse production issues.

Is crop insurance for Kashmir’s farmers possible now?

As several states continue to opt out of PMFBY, the Union agriculture ministry has now asked the National Rainfed Area Authority (NRAA) to suggest alternative risk mitigation measures for high-risk areas/crops. The idea is that low risk crops could still be covered under PMFBY with reduced burden of premium on the states.

“Each of the 15 agro-climatic zones in the country is spread over a vast geographical area where many crops are recommended by the Indian Council of Agriculture Research. However, there is a need to identify low-risk crops in a particular cluster, comprising one or more districts, within a climatic zone,” a senior government official said.

Under PMFBY, premium to be paid by farmers is fixed at 1.5% of the sum insured for rabi crops and 2% for kharif crops, while it is 5% for cash crops. The balance premium is split equally between the Centre and states. Many states have demanded their share of the premium subsidy be capped at 30%. Currently, there is no pan-India fixed actuarial premium rate under PMFBY and it varies from area to area and crop to crop. Actuarial premium rates charged by the insurance companies are determined through bidding conducted by the states.

Under these circumstances, J&K’s administration can go for a fresh re-engagement process, remove the hurdles and try to negotiate with the centre on the quantum of the premium J&K government and the farmers can bear.

What officials, political parties and farmers say on this in J&K?

Director Agriculture Department, Kashmir, Chaudhary Iqbal, who is also the nodal officer for the implementation of the insurance scheme in J&K, told Ziraat Times that the department has been making several efforts for successful implementation of the scheme in Kashmir. “However, there are a few technical issues that still need to be sorted out with insurance companies, like loss assessment and infrastructure for early weather warning for farmers etc.”, he added.

Former Director, Agriculture Department, Altaf Andrabi, has expressed the same views.

Imran Nabi Dar, Spokesperson of National Conference, while earlier speaking to Ziraat Times on this matter, said, “It seems they have messed up with the whole agriculture system. It is better to understand it by way of the crop insurance scheme example. In the whole country, the scheme has been implemented and even in Jammu but not in Kashmir. Why is this discrimination there? Surprisingly, when we raised this as a question, the former PDP-BJP govt said that we are politicizing the issue. There has been a tremendous loss to farmers that could have been stopped.”

Prof. Saif Ud Din Soz, senior Congress Leader, observed that “Farming sector is in deep distress throughout the country. Its the overall result of demonetization and then sudden implementation of GST. Farming community under small sector have suffered huge damage.”

“You cannot expect anything good for farmers from the pro-corporate government. Instead of giving benefits, they have been reducing the existing benefits and subsidies. The formulas that they have been following is in no way going to double the farmer’s income even after 2022. It seems quite an impossible thing. Privatization has added to the damage”, Ghulam Nabi Malik, General Secretary, J&K Kissan Tehreek told Ziraat Times.

FARMERS SPEAK

Mohammad Yaqoob Mir (Qalampora, Pulwama)
We need crop insurance more than ever. Benefits to the farmers are decreasing day by day. The easy availability of substandard pesticides and high rate of these pesticides at the same time are playing an important role. We have now good quality production. It costs us more than what we earn. When I compare the rates in 2010 to the current scenario, every single input we use is of higher prices but the rates at which our produce is sold yet remains same and it is only because of non-availability of markets on time.

Shabir Ahmad Dar (Shirmal Shopian)
Insurance is very important. We get substandard pesticides and fertilizers in the market and there seems no watch on it. That adds uncertainty for our fruits. Water Pumps or spray motors are p[rovided on subsidies and we consider that as a relaxation to the farming community. But to avail those subsidies, there is lengthy paperwork and formalities and takes more than 4 years for a farmer to get approval for the subsidies.

Ghulam Nabi Bhat (Wathoo, Shopian)

Without insurance we are very vulnerable. If you ask me what one thing has happened in the past government for farmers, its the 100% hike in the rates of pesticides and fertilizers. And to add on it, the pesticides and fertilizers available are again of substandard and thereby it adds to the hurdles of the farmers instead of proving to be beneficial. They could have at least stopped the marketing and distribution of such substandard pesticides. I want to question the authorities and administration that if certain pesticides are banned for use how on earth are they available in the market? What does the term ban mean for them? They are indirectly exploiting farmers and it has a direct impact on the income of farmer as well as the quality of produce.

Khursheed Ahmad Dar (Rafiabad, Sopore)

Central government came up with the doubling of farmers income till 2022 but what kind of efforts are being made should be a question. So far, we haven’t seen any such measure wherein farming community will say that there might be slightly more income. There are huge expenses compared to income. If we check the freight rate while in the peak season, the rates are comparatively higher and government never intervenes in it. It’s the grower who suffers. Also, the rate for freight should be as per weight and not the box.

Javaid Ahmad (Kunzer, Tangmarg)

Nothing has been done so far that can be counted as beneficial for the farmer. People in the farming community are moving towards urbanization or whatever fetches them a good amount, Government has made the survival of farming community a lot difficult.

How insurance companies approach the issue in J&K?

Most insurance companies Ziraat Times spoke to have found Kashmir’s conditions “non-conducive” to take up the insurance scheme. The fact is that the negotiati.ons between J&K administration and these companies haven’t progressed to an advanced stage.

Most insurance companies adopt “experience method’ in which base premium is calculated based on the loss cost/burning cost — premium required to meet the claims based on the experience of past premium and claims. States also provide yield data of past 10 years and indemnity level to insurance companies to help them arrive at premium calculation before submission of bids. Such information has been mostly missing in Kashmir.

The NRAA has hired some professional agencies to conduct the nationwide survey and may submit its report in six months. The country has been divided into 15 agro-climatic regions, identified on basis of soil type, temperature, rainfall and water resources availability.

How is the centre trying to navigate the situation

According to a report of the parliamentary standing committee on agriculture, submitted this week, the agriculture ministry has said that most of these states have opted out of the PMFBY due to their financial constraints and not because the scheme is unpopular among the farming community. The committee has also asked the ministry to change the guidelines that stipulated to disallow states in implementing PMFBY in next season if they fail to release of subsidy premium within deadline. The parliamentary panel has expressed apprehension that this provision “may lead to withdrawal of states from the scheme.”

“Withdrawal/non-implementation of PMFBY by more states in subsequent years will defeat the very purpose for which the scheme was launched. The Committee, therefore, recommend the Department to properly look into the reasons/factors leading to withdrawal/non- implementation of the PMFBY by Punjab, Bihar, West Bengal, Andhra Pradesh, Gujarat, Telangana and Jharkhand and to initiate suitable steps so that States continue to implement the Scheme and farmers reap the benefit of the Scheme,” the report said.

Last month, the Centre wrote to the state governments seeking their views on including the so-called ‘Beed formula’ as an option under PMFBY amid several states developing cold feet on the scheme. The Centre in February last year had changed the guidelines and allowed states option of three-year contract with insurers on the premium charged in crop insurance. States also can continue with the existing system of inviting bids for premium every year, as per the guidelines.

Under the ‘Beed formula’, also known as the 80-110 plan, the insurer’s potential losses are circumscribed – the firm won’t have to entertain claims above 110% of the gross premium. The insurer will refund the premium surplus (gross premium minus claims) exceeding 20% of gross premium to the state government. Of course, the state government has to bear the cost of any claims above 110% of the premium collected to insulate the insurer from losses, but such higher level of claims rarely occur, so the states reckon the formula in effect reduces their cost to run the scheme.