How crop Insurance works and why you should enrol

In the unpredictable world of agriculture, farmers can never be certain whether their crops will meet expectations. To protect them from financial loss, crop insurance acts as a vital safety net. But how does crop insurance work, and why should you enrol?

Crop insurance protects your crops against risks such as drought, floods, pests and other natural calamities. Insurance is taken out after the crop has been sown. It can be a game changer for farmers, helping safeguard both their livelihoods and investment. Also, check 'Impact of climate change on mandi rates'.

How does crop insurance work?

Crop insurance protects farmers against financial losses resulting from crop failure or damage caused by unforeseen circumstances. Consider it similar to any other insurance policy you may have, such as health or auto insurance, except that it protects your crops and, consequently, your revenue rather than your car or health.

Identification of crops for insurance

Initially, crops are identified for insurance. Crop insurance does not cover every crop. Major food crops, oilseeds, and commercial crops are covered under risk. There are different types of policies based on different coverage. These policies are:

• Weather-related events

• Pests and diseases, and animal attacks.

• Landslides and natural fires

Premium calculation and payment

Farmers pay a small amount of premium, which is calculated by considering some factors like crop type, susceptibility to risk, and historical risk of the regions. The premium is subsidised by the government in most cases, making it affordable for farmers. The government insurance premium is much lower to reduce the burden on farmers. 

Sum Insured

The sum insured is the maximum amount of claim in the event of crop failure. It usually takes into account inputs like seeds, fertiliser, labour, and irrigation and is based on the cost of cultivation per acre or hectare. Check Ratlam mandi rates. 

Notification of Loss

Farmers must notify the insurance company or government agency if crops are damaged or destroyed. This initiates the claim process, and the notification of the claim is given by the mobile app, bank or local agricultural departments.

Assessment of loss

On reporting the loss, the team first assess the field and evaluates the extent of damage. The evolution process includes scientific methodology, yield estimation surveys and remote sensing to identify the percentage of crop loss. Check Jabalpur mandi rates. 

Claim settlement

The insurance company determines the reimbursement based on the loss assessment. The compensation is sent directly to the bank account of the farmer. The compensation aims to cover a significant portion of the financial loss incurred. 

Why You Should Enrol in Crop Insurance: The Undeniable Benefits

The benefits of enrolling in a crop insurance scheme extend far beyond simply recovering losses. They support both individual farmers and the overall stability and prosperity of the agricultural industry. Also, check '5 crops with low investment and high returns'.

Financial security and stability

Crop insurance gives a sense of security and financial stability to the farmers. It protects farmers from the disastrous effects of crop failure. Without it, farmers may experience severe anguish as a result of a single poor season that sends them into a debt cycle. Insurance provides them with input expenses and prevents financial devastation even if the crop fails. 

Debt reduction

Many farmers take loans for cultivation. On crop failure, these loans become impossible to pay, resulting in debt. Crop insurance money helps in settling this loan and prevents them from falling deeper into financial distress. 

Encourages investment in agriculture

With crop insurance, farmers may invest in better seeds and fertiliser because they feel secure and confident. This confidence can lead to increased productivity, and general agricultural growth may result from this confidence. It makes agricultural investment more appealing by lowering the inherent risk involved. 

Promotes sustainable farming practices

Knowing that the crop is insured, farmers are willing to take more risks and experiment with new and more efficient farming practices. They can experiment with drought-resistant varieties and water-saving techniques. Also, check '5 medicinal plants to grow for profit'.

Contribute to food security

Crop insurance indirectly supports national food security by stabilising agricultural output and avoiding widespread crop failures that would force farmers into bankruptcy. This ensures stability in the agriculture sector. 

Pradhan Mantri Fasal Bima Yojana (PMFBY): Government insurance scheme

There are several private companies providing insurance, but there is one crop insurance launched by the government to strengthen farmers and promote agriculture. This scheme is Pradhan Mantri Fasal Bima Yojana (PMFBY). It was launched in 2016 with the aim of providing financial support for farmers suffering crop damage and financial distress. 

Low farmer premium: Farmers have to pay very low premiums, and the balance is paid by the government. 

Comprehensive coverage: The scheme covers a wide range of natural calamities and risks. Also, check "How to use e-NAM for better mandi price".

Use of technology: The scheme used technology to assess the damage. These technologies are remote sensing, smartphones, and drones to estimate yields.

Crop insurance is not a luxury, but important for farmers. This investment strengthens the agrarian economy and farmers' financial condition. Farmers can safeguard their future, support national food security, and create a more prosperous future by comprehending how it operates and embracing its prosperity.