Comparison of Total Farmers & Acreage cultivated and Farmers & Acreage

Working Group proposes the penetration targets in terms of farmers / acreage covered under insurance for the XI-Five Plan Period in Table – 12 below:
Table-12: XI Plan Insurance Penetration Targets
S.No Year
Insurance
Penetration
(Cultivators)
Insurance Penetration
(Acreage)
1 2007-08 20%
(24 millions) 38 million hectares 2008-09 25%
(30 millions 48 million hectares 2009-10 30%
(36 millions 58 million hectares 2010-11 35%
(43 millions 69 million hectares 2011-12 40%
(50 millions 80 million hectares
4.9.3. Financing Mechanism
The very nature of the agriculture sector, does not make it appropriate to view crop insurance viability merely from financial statistics viewpoint. This is very relevant, as crop insurance schemes, both in developed and developing nations are greatly dependent on the support of the government. A developing nation like India, is not just dependent on weather conditions, but also suffers the brunt of natural disasters, as it is ill equipped to deal with such events. With nearly rd of the population dependent on agriculture, considerations,
which have a direct bearing on the policy for agriculture development in India, include the effects of socioeconomic and financial disruptions, as a result of agricultural risks. Further,
agricultural risks are systemic in nature wherein a single event may lead to multiple losses. It is with such considerations, that crop insurance has been receiving governmental subsidies inmost countries including developed countries where it has been successfully implemented.
It will be in order for crop insurance, to be regarded as a support measure in which the government plays an important role, because of the benefit it provides to the farmers, and to the entire national economy through forward and backward linkages. Society can thus,
significantly gain from more efficient sharing of crop and natural disaster risks. The principle behind the evaluation of crop insurance schemes allover the world is along these lines, and hence receives, the active support and finance of governments. To ensure that the burden on government is gradually reduced, increasing the number of participating farmers, through better marketing efforts, amongst others, is necessary. Integrating various risk mitigation

methods and streamlining funds, not only injects accountability and professionalism into the system, but also increases economic efficiency and viability.
4.9.4. Subsidy levels in other countries:
The crop insurance support mechanism of some of major countries is given in Table-13:
Table-13
Government Crop Insurance Support Mechanism in Major Countries
S.No Country
Nature of Support
1. USA
(covered nearly million out of total 8 million farmers and about 78% of cropped area during Subsidy in premium (ranges from 38 percent to 67 percent;
average for 2003 is 60 percent)
-
Reimbursement of administrative expenses of insurance companies (these were about 22 percent of total cost of the program during Reinsurance support for risky crop lines
-
Technical services in premium, policy guidelines- free insurance of catastrophic cover for resource poor farmers- non insured assistance to farmers for crops no insurance is available
-
Creating awareness amongst farmers
Over all subsidy is about 70-75 percent
2. Canada- subsidy in premiums (80-100 percent for lower levels of coverage and 50-60 percent for higher levels of coverage- significant contribution towards provincial administrative costs- provides deficit financing to provincial governments- technical services by setting premium rates
Overall subsidy is about 70 percent
3. Philippines- subsidy in premium (ranges from 50 percent -60 percent)
-
Banks share premium of loanee farmers (15-20 percent of total premium cost)
-
Financial support to Philippines Crop Insurance Corporation
(PCIC) in extreme adversities
Over all subsidy is about 70 percent for loanee farmers
& about 50 percent for non-loanee farmers
4. Spain
-
Subsidy in premium (average 55 percent during Reinsurance support (50 percent of reinsurance cost is paid by the government)
-
Technical guidance
Overall subsidy between 50-60 percent

85
4.9.5. Farmers capacity to pay premium:
In terms of the Agricultural Census 1995-96, marginal farmers having upto 1 hectare of land,
comprised 61.6 of the farm holding population, owning only 17.2 % of the area. Similarly,
small farmers (1-2 hectares, comprise 18.7 % of the farm holding population, and own 18.8
% area. Only 19.7 % of farmers, have landholdings of more than 2 hectares. The average holding size of marginal farmers is a lowly 0.40 hectares, and that of small farmers, is only 1.42 hectares. Table 14 below amply demonstrates the small landholding size,

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