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CROP INSURANCE FACING SEVERAL GLITCHES

Mr. Javaid Ahmade Mir & Dr. Rekha Acharya of Devi Ahilya Vishwa Vidyalaya Indore write in their article on Agricultural Risk Management. For details please see October - December 2017 issue of Economic Challenger. 
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Heckman model was applied to model farmers’ interest in crop insurance and the intensity of crop insurance and its determinants to analyze the data from the 2 regions of Ujjain district. Factors like age farm ownership farming experience and total off-farm income had negative effects on having crop insurance currently while factors like education family size farm size had positive effects on it. Similarly farmers’ were positively influenced by factors like education off-farm income; farm size and family size while age gender, ownership experience was negatively affecting farmers’ interest in crop insurance.
One of the major complaints from most of the respondent that came to limelight in our survey was irregularities were persistent with the whole procedure of crop insurance. This is a case of moral hazards. Among these acts include not taking adequate measures to protect farmers from low yield due to the disaster such as drought, excessive rainfall etc. The acts of corruption complaint against village level officers and local village level representatives were found in the field survey. Therefore it is need of the hour to address such complaints. A proper monitoring of the whole procedure can help to address such complaints. Digitalization of crop insurance procedure can be a method to avoid such problems.
The indemnity or compensation claims are paid as per land holding size of the farmer. This method has serious problems of inappropriate calculations as the cost of production of each crop differs from one to another. In case of loss in revenue due to adverse weather or market variation, each farmer is paid according to the size of land that farmer holds. in such situation, compensation should be according to the crops cultivated by the farmers and not to the size of land. 
Administrative apathy and delayed payment is another major hurdle in crop insurance which hurt farmers’ production plans and finally his living standard. Majority of the farmers’ had complained of administrative lethargy and farmers face invective of the officials whenever they went to claims their compensation. It is a case of moral values and in this case, proper training of moral values should be imparted to the officials.
Risk pooling among the farmers and cooperative societies within the homogenous unit of area and introducing the provision of risk pooling among the farmers is possible can reduce local variations of risk level among the farmers living within the homogenous unit area defined by weather index approach. Such a cooperative be free of the influence of insurer but can be introduced and formed at the time of contract with the support of the government or local authority. When the crop production is not affected, such a co-operative can accumulate a certain amount of crop in kind from all the farmers and put as a deposit. This can be utilized later to pay the premium for a season while a situation occurs that most of the farmers are affected last season by other disasters, which was not insured.

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