International Journal of Agriculture Sciences ISSN: 0975-3710 & E-ISSN: 0975-9107, Volume 12, Issue 5, 2020, pp.-9611-9613. Available online at https://www.bioinfopublication.org/jouarchive.php?opt=&jouid=BPJ0000217

Research Article PERFORMANCE OF CROP INSURANCE SCHEMES IN DISTRICT

M. PRAHADEESWARAN* Department of Agricultural Economics, Agricultural University, Coimbatore, 641 003, Tamil Nadu, India *Corresponding Author: Email - [email protected]

Received: March 01, 2020; Revised: March 12, 2020; Accepted: March 13, 2020; Published: March 15, 2020 Abstract: Crop Insurance serves as a cushion against yield led income loss due to risk factors. Several insurance schemes had been implemented since 1972 with improvements based on experience in the earlier schemes. Agricultural Insurance Company is the Implementing Agency of Pradhan Mantri Fasal Bima Yojna in . This district is classified under cluster-1 I which is medium risk category. Sample survey results showed that nearly 78 percent of crop loans were dispersed through cooperative societies and 22 percent through the commercial banks. Madurai District Central Cooperative Bank (MDCCB) and Lead Bank play a crucial role in dispersal of loans and help farmers in insurance claims. Nearly 80 percent of the sample farmers were willing to pay the existing level of premium, 17% of the farmers were expecting to reduce the premium from the existing level. Though adequate awareness was created among the farming community about the PMFBY, 24 percent of farmers were not aware of prevented sowing and exempted clauses of the scheme. Overall, the farmers were satisfied with the PMFBY compared to NAIS as it provided large amount of claims in general. Keywords: Crop Insurance, NAIS, PMFMY, AIC, Insurance claims Citation: M. Prahadeeswaran (2020) Performance of Crop Insurance Schemes in Madurai District. International Journal of Agriculture Sciences, ISSN: 0975-3710 & E- ISSN: 0975-9107, Volume 12, Issue 5, pp.- 9611-9613. Copyright: Copyright©2020 M. Prahadeeswaran. This is an open-access article distributed under the terms of the Creative Commons Attribution License, which permits unrestricted use, distribution and reproduction in any medium, provided the original author and source are credited. Academic Editor / Reviewer: Dr Pradeep Mishra, R. Cakir

Introduction Agriculture is one of the risky professions and farmers face several challenging factors which are beyond their control. Natural risk factors bring down the crop yield thus the farm income. Mishra et al., (2015) studied the production trends of various foodgrains and exportable crops [1]. However, accuracy of predictions is determined not only by the methodology but the factors influencing the yield of crops. Crop Insurance is a mechanism to support the farmers by providing financial support during risk circumstances. Farmers gain the confidence to continue the farming because of the cushion effect (compensation) provided under the insurance schemes. A pilot insurance scheme was introduced during early 1970s later the Comprehensive Crop Insurance Scheme (1985-99) and the National Agricultural Insurance Scheme (NAIS). The private sector insurance started implementing the weather insurance products, widely touted as the solution to the inherent drawbacks of the yield-based insurance [2]. Pradhan Mantri Fasal Bima Yojna (PMFMY) has been implemented since 2016 which replaced the earlier schemes with several improvements. It is voluntary for the farmers in general but compulsory for those availing institutional credit and it is Fig-1 Map of Madurai District shows different blocks based on Area Approach. Several studies were carried out in Tamil Nadu on the Agricultural Insurance Company is the implementing agency of PMFBY in implementation of the crop insurance schemes and suggested several Madurai. The crops like Paddy, Maize, Blackgram, Redgram, Greengram, improvements for better implementation and farmers benefit. The present paper Groundnut, Cotton, Cowpea, Gingelly, Sunflower, Turmeric, Onion, Chillies, aimed to assess the performance of crop insurance schemesin Madurai District of Banana, Tapioca were notified during 2016-17 and 2017-18 by the Government of Tamil Nadu [3-5]. Further to identify the willingness of farmers towards payment of Tamil Nadu for this district. premium and the problems faced by the farmers in this region. Table-1 Details of different crops, villages and notified units in Madurai district Crop Block Firka Notified Unit Materials and Methods Paddy Melur Surakkundu Sugarcane Melur Keelavalavu Keelaiyur Sampling Cotton T.Kallupatti Peraiyur ChinnaReddypatti Madurai is classified under Cluster I category, which is moderate risk region. Two Sorghum T.Kallupatti Peraiyur Chinnapoolampatti blocks namely Melur and T. Kallupatti were selected to understand the insurance Maize T.Kallupatti Peraiyur Chinnapoolampatti coverage for crops grown in different production environments. In total, 120 sample farmers (60 loanee and 60 non-loanee) were contacted and the crops Collected data were analyzed using descriptive statistics and tabulated under covered were paddy, sugarcane, cotton, sorghum and maize. different heads.

International Journal of Agriculture Sciences ISSN: 0975-3710&E-ISSN: 0975-9107, Volume 12, Issue 5, 2020 || Bioinfo Publications || 9611 Performance of Crop Insurance Schemes in Madurai District

Results and Discussion Table-6 Crops cultivated by sample farmers in Madurai District Major crops cultivated in Madurai district are paddy, millets, pulses, oilseeds, cotton and SN Crops cultivated Loanee farmers Non-loanee farmers sugarcane and their area, production and yield are given in [Table-2]. 1 Paddy 20(33.33) 18(30.00) Table-2 Area, production and productivity of crops in Madurai District (2011-12 to 2014-15) 2 Sugarcane 8(13.33) 11(18.33) Major Crops Area (ha) Productivity (T/ha) Production (MT) 3 Cotton 14(23.33) 12(20.00) Paddy 39845.5 4.23 182420 4 Sorghum 8(13.33) 7(11.67) Millets 18454 2.43 46154 5 Maize 10(16.67) 12(20.00) Pulses 8161.5 0.72 6096.5 (Figures in parenthesis denote percentage to total) Oil seeds 3531.5 1.71 7347 Table-7 Insurance premium for different crops and the sum assured in Madurai District Cotton 5392 1.02 5699 SN Crop Premium (%) under Premium Sum Insured Sugarcane 4459 94.02 416182 PMFBY (Rs./ac) (Rs/ac) (Source: Seasons and Crop Reports) 1 Paddy 1.5 372 24801 During the study period (2016-17), claims settled by the Agricultural Insurance 2 Kharif Maize 2 362 18097 Company, ICICI and New India Assurance are given in [Table-3]. District wise 3 Rabi Maize 1.5 271 18097 details were obtained from these companies and different news publications. 4 Cotton 5 915 18298 5 Sorghum 2 207 10334 Table-3 District wise claims settled by different insurance companies in Tamil Nadu 6 Rabi Sorghum 1.5 155 10334 Districts Claims settled 2016-17 7 Sugarcane 3.2 1613 50408 (Rs. In Crores)

Cluster I Districts: AIC Scale of finance for different crops is decided by the Bankers Committee and 100 Ariyalur, Dindigul, Erode, Kanya kumara, Karur, percent of it is considered as sum assured under PMFBY [Table-7]. The premium 15.08 Namakkal and Perambalur rates are low as compared to NAIS and different premium rates are prescribed for Madurai 8.92 same crop in different seasons based on the yield risk. Farmers pay the premium Tiruvarur 489 Trichy 20 and the difference between the actuarial rates and the farmers share is equally Ramanathapuram 355 borne by the state and central governments. Cluster II Districts: ICICI Table-8 Farmers willingness to pay the premium for insurance coverage Coimbatore, Cuddalore, Kancheepuram, Salem, SN Premium rates Loanee farmers Non-loanee farmers Sivagangai, Tirunelveli, Tiruppur, Tiruvallur and 580.8 1 Slightly more than existing 2(3.2) - Tiruvannamalai farmers rate Cluster III Districts:NIA 2 Existing farmers rate 48(80) 32(53.12) Dharmapuri 3.28 3 Less than the existing rate 10(16.6) 28(46.66) Krishnagiri 0.25 Nagapattinam 437.76 [Table-8] shows that among the loanee farmers, 80 percent of them were willing to Pudukkottai 2.32 Thanjavur 2.70 pay the existing level of premium (PMFBY), 17 percent of farmers were willing to Theni 0.84 pay less while three percent of the farmers were willing to pay slightly high Thoothukudi 153 premium for a high indemnity. In case of non-loanee famers, 53 percent of the Vellore 1.05 farmers were willing to pay the existing premium and 47 percent of them were Villupuram 87 willing to pay slightly less premium and expecting more subsidy for premium. Virudhunagar 106 Table-9 Yield risk level and the claims obtained by the farmers Tamil Nadu 2263 SN Crops cultivated Estimated yield reduction (%) Average Indemnity (Source: AIC and NIA, 2017) in 2016-17 (Rs./ac) In total 15.37 lakh farmers, with an acreage of 31.85lakh acres, were covered in 1 Paddy 52 12,915 Tamil Nadu during 2016-17. 2 Sorghum 50 5381 Table-4 Source of credit and credit linked insurance for sample farmers 3 Maize 50 9423 SN Source of credit Loanee farmers Non-loanee farmers 1 PACS 47(78.33) - The yield risk was estimated around 50 percent for paddy, sorghum and maize 2 Commercial Banks 13(21.67) 60(100) and the average claims realized by the farmers were Rs. 12,915 per acre of (Figures in parenthesis denote percentage to total) paddy, Rs. 5,381 per acre of sorghum and Rs. 9,423 per acre of maize as shown Crop insurance is linked with the agricultural credit availed form formal institutional in the [Table-9]. sources and 78 percent of the sample loanee famers availed loan from PACS and Table-10 Number of claims made by the farmers in the past five years 22 percent from commercials banks [Table-4]. But it was voluntary for the non- SN No. of times Loanee farmers Non-loanee farmers loanee farmers who availed loan from commercial banks. 1 Two times 42(70.00) 51(85.00) 2 Three times 18(30.00) 9(15.00) Table-5 Details of Own farms and tenant farms under insurance coverage in Madurai district It could be observed from [Table-10] that in the past five years, 70 percent of the SN Particulars Loanee farmers Non-loanee farmers loanee farmers and 85 percent of non-loanee farmers claimed the insurance two 1 Own farm 57(95.00) 59(98.30) times; while 30 percent of loanee farmers and 15 percent of non-loanee farmers 2 Tenant Farm 3(5.00) 1(1.70) claimed three times. Total 60(100) 60(100) Table-11 Awareness on Crop Insurance Components by the sample farmers (Figures in parenthesis denote percentage to total) S No. of times Loanee farmers Non-loanee farmers Based on the ownership and operatorship, sample farms were classified in [Table- 1 Prevented sowing 16(26.67) 36(60.00) 5]. Among the loanee farmers, 95 percent of the farms were owned by farmers 2 Threshold and Indemnity calculation 4(6.67) 7(11.67) and the remaining five percent was operated by tenant farmers. Among the non- 3 Exempted clause 31(51.67) 44(73.33) loanee farmers, 98 percent of them own the farm land and only two percent of (Post-Harvest loss, fire or enmity) them were tenant farmers. Awareness on the components of the crop insurance schemes were analyzed and Paddy, sugarcane, cotton, sorghum and maize were the crops cultivated by the presented in [Table-11]. Among the non-loanee farmers, 60 percent of them were sample farmers. The proportion was almost similar in case of loanee and non- aware of prevented sowing but only 27 percent of loanee farmers were aware of loanee farmers as shown in [Table-6]. that.

International Journal of Agriculture Sciences ISSN: 0975-3710&E-ISSN: 0975-9107, Volume 12, Issue 5, 2020 || Bioinfo Publications || 9612 Performance of Crop Insurance Schemes in Madurai District

Awareness on threshold and indemnity calculation was very low among these two [2] Nair R. (2010) Economic and Political Weekly, 55(6), 19-22 group of farmers. More than 70 percent of non-loanee farmers and 50 percent of [3] Mani K., Chandrasearan M. and Selvanayaki S. (2012) Agricultural loanee farmers were aware of exempted clauses under the insurance scheme. Economics Research Review, 25(2), 279-290. Table-12 Problems faced by the sample farmers regarding the Crop Insurance [4] Frank Rathina Kumar and Breshnev (2014) International Journal of SN Problems ranked by the farmers Score World Research, 1(9), 73-80. 1 Indemnity is inadequate 53.17 [5] Mohanapriya and Senthilkumar (2016) Proceedings of International 2 High premium rates (need more subsidy) 48.31 Conference on Recent Trends in Science, Technology and 3 Loan by PACS is limited to part of the land holding 38.59 4 Claims are used to clear old debts 12.87 Management, ISBN 978-93-86171-05-4

Problems faced by the sample farmers were given in [Table-12]. The problem of low Indemnity was felt and ranked by the farmers as most important problem followed by high premium rates. Loan forwarded by the PACS was inadequate and it was limited to only part of their land holding was third important problem by the farmers. Forth, the claims deposited in their bank account was used to clear their old debts was expressed as an important concern for few farmers.

Conclusion Agricultural Insurance Company is responsible for the crop insurance in Madurai district. PMFBY is more beneficial to farmers compared to NAIS because yield loss assessment is done at village level and also the low premium amount. Most of the sample farmers were willing to pay the existing level of premium but felt the indemnity to be enhanced. Continuous training to farmers on updated aspects of crop insurance programmes like prevented sowing and local damages are needed. Lending Institutions and Insurance Institutions are facing some problems like lack of technical man power and large number of claims. Clear cut deadlines; computerized registration and claim process which are adopted in recent times avoid major problems in insurance.

Application of research: Extent of the crop insurance coverage and the benefits realized by the farmers in Madurai district

Research Category: Agricultural Economics

Acknowledgement / Funding: Author is thankful to Department of Agricultural Economics, Tamil Nadu Agricultural University, Coimbatore, 641 003, Tamil Nadu, India. Author is also thankful to Mr. Saravanan, MDCCB and Dr. P. Luxmanan, AIC for their valuable inputs during this study.

** Principle Investigator or Chairperson of research: Dr M. Prahadeeswaran University: Tamil Nadu Agricultural University, Coimbatore Research project name or number: Performance of Crop Insurance Schemes in Tamil Nadu

Author Contributions: Sole author

Author statement: Author read, reviewed, agreed and approved the final manuscript. Note-Author agreed that- Written informed consent was obtained from all participants prior to publish / enrolment

Study area / Sample Collection: Madurai

Cultivar / Variety / Breed name: Paddy, Sugarcane, Cotton, Sorghum, Maize

Conflict of Interest: None declared

Ethical approval: This article does not contain any studies with human participants or animals performed by any of the authors. Ethical Committee Approval Number: Nil

References [1] Mishra P., Sahu P.K., Padmanaban K., Vishwajith K.P. and Dhekale B.S. (2015) International Journal of Agriculture Sciences, 7 (3), 474- 481.

International Journal of Agriculture Sciences ISSN: 0975-3710&E-ISSN: 0975-9107, Volume 12, Issue 5, 2020 || Bioinfo Publications || 9613