Raitu Jagruthi

Cultivating Assurance in Farmers

A Comprehensive Scheme for Commercially viable

Crop Insurance Scheme and empower Farmers with

Risk Mitigation and Best Farming Practices.

Sumanth Garakarajula

Sreedhar Bandaru

Agrarian Crisis Scenario India

Small land holdings

Inadequate access to institutional credit

Land & Tenant issues

Timely available Seeds, Fertilizers

Spurious Seeds and Pesticides

Lack of irrigation facilities

Erratic power supply

Uncertain weather

Unscientific practices of farming

Access to Markets and

Low Market price and High cost of production

Unstable Income -

Debt ridden

Farmer

Becoming

Suicidal

Governments Failed to Avert the

Situation

Numerous government plans,

programs, schemes, waivers,

subsidies failed to improve the

farmers situation for decades.

Let us ask ourselves!

How farmers in developed countries surviving?

What is the that Indian farmers lack and the First world Farmers have?

The answer ?

Risk Management

Farmer Risks:

Yield

Drought

Flood

Rainfall

Price fluctuation

Hail etc.,

Crops are covered by crop insurance

Why Crop Insurance failed in India?

Comprehensive Crop Insurance (1984)

Scheme and National Agricultural Crop Insurance Scheme- (1999)

Crop insurance schemes introduced in India were financially unsuccessful and largely a failure (Enrique Pantoja, 2002).

Government of India scrapped its first Comprehensive Crop Insurance scheme and the Indian Government reported that the scheme is not

viable. (Ministry of Finance, Government of India, 1997)

Farmers who are paying insurance premium were not compensated because the Mandal average output never fell before 60 percent which is

threshold level for payout.

Huge losses in implementing these schemes was the multi-peril risk coverage. For covering multiple risks faced by farmer, comprehensive data

are essential for actuarial calculations. Even after 25 years of

implementation of crop insurance schemes no private or public agency

had reliable data.

Why Crop Insurance failed in India?

The problems of administrative costs, fraud, adverse selection, and moral

hazard seem insuperable in the case of crop insurance, and no private

insurers have been willing to supply crop insurance to low-income

consumers for these reasons. (Micro Insurance Demand and Market

Prospects-India)

Hindrances for Crop Insurance in

India?

High Administrative Costs

No Actuarial Data

Unscientific Farm practices

Micro-Spatial Weather Data

Adverse Selections, Moral Hazard, Fraud

The Solution

Raithu Jagruthi Project address all the issues that are hindering crop

insurance for farmers

Profiles Farmers and their Farms

Establishes micro-weather stations

Monitors Individual farms and farmers

Teaches Scientific Practices

Delivers Agriculture advisory

Document Farmer practices on Daily basis

Checks for Spurious seeds and pesticides

Assist in procuring credit, seeds and fertilizers

Helps them access to markets

Creates a Farmer Credit Farming Practice History

The Solution

Monitor

Document

Collect Data

Deliver advises

Verify seeds etc

Agri-Advisory Division

Scientific Experts advising farmers

Farmer

Seeds and presticidesellers, Banks, AO officers,

Govt officials, Weather services etc.

IT Division keeps all data

Raitu JagruthiRecruits

Farmers and enrolls for insurance.

Insurance Company

Seed/Pesticide/Fertilizer Sellers (farmers choice) are

approved by Raitu Jagruthi to eliminate the possibility of

spurious seeds and pesticides

Farmer Data Service Division

Farmer

RJ verifies and approves Seeds and pesticides for

Underwriter access

the data for the

indemnity

Now Back to the Question!

What is the that Indian farmers lack and the Developed country Farmers have?

In developed countries:

Farmer follow best crop practices

Insurance companies have the individual farmers historical actuarial Data

Micro weather data

No fraud, moral hazard and information problems associates with farmers.

Benefits

Safety net for farmers and their Families

Stable income for farmers

Farmers learn best practices

Farmers will have documented history of their farming practices

Accessibility to credit and insurance increases.

Lower cost of production by scientific farming

Access to markets

Sustainable agricultural development

Sociological impact of reduced distressed farmers and families

Generates Employment

Real and permanent good!

Future Extension of this project

The project can itself become an insurance company in future and underwrite the indemnity

A huge data of farmers and families will be helpful in further services like micro-health insurance etc.

A communication network for farmers will be created with this system, which can use for Agricultural Extension

services.

Project Outline Duration of the Project: 3 years

Location of implantation : 10 mandals or 250 villages in Nizamabad Parliamentary Constituency

Target Group and No. of Beneficiaries: All sizes of farmers. About 80,000 Farmer families

Budget Estimate: 35 Crores for three years.

Employment generation: about 1000 local jobs.

Deliverables:

A well tested individual historical data of farmers for the actuarial use.

A well tested IT-enabled system to resolve location-specific crop husbandry problems of all crops in a periodic manner throughout the year and reachable to all farmers.

A well tested scalable system.

A robust system which is ready to replicate.

A model for state-level extension system using ICTs

A framework to capture location-specific content.

A data set of individual farmers farm related practices, crop problems and advisories.

In long run, Insurance is the only way to

secure stability in farmers income.

Insurance coverage is Indispensable to farmer. It is only the matter when it starts!

Subsidies, waivers and other schemes can only be effective, if farmer learns to manage risk and follow best practices.

This pilot project educate and empower farmers for Risk Mitigation.

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