The working group on risk management in
When low yield variability coexists with a weak natural hedge
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- 4.6. Livestock Insurance 4.6.1. Livestock Economy
| When low yield variability coexists with a weak natural hedge, forward pricing alone easily outperforms crop yield and revenue insurance in reducing risk, because price variability plays the dominant role in determining revenue variability, and because of the weaker relationship between the on-farm yield and the aggregate market price. Still, additional marginal gains in risk reduction can be obtained by combining crop revenue insurance with forward pricing. 4.6. Livestock Insurance 4.6.1. Livestock Economy Livestock forms a significant proportion, of rural wealth and is an important source of rural livelihood in India. Almost allover the country, livestock-related economic activities are an indispensable adjunct of agricultural activity. In addition, livestock-related activities form the exclusive source of income for some groups of the rural community. The livestock economy is large, with some segments being larger than those of conventional agriculture. The value of output from the livestock sector is Rs. 1,56,000 crores, which is about 20% of the value of output from agriculture. The value of output of milk is Rs. 1,10,000 crores, as compared to paddy which is Rs. 78,200 crores, or wheat at Rs. 48,450 crores. Besides this, India is a significant exporter of livestock products. Livestock, poultry and related products, earned Rs. 4,734 crores, while leather products earned Rs. 2,568 crores byway of exports in Apart from the absolute size of the livestock sector, it should be recognized that livestock related economic activities, have some unique features, in terms of income generation, for the agricultural community. For instance, livestock is often the source of continuous income for many, or at least one that generates income more frequently, than does regular agriculture. While conventional agricultural activity, produces seasonal incomes (typically twice a year in lump sums, it is left to the individual farmers to manage their cash flow uncertainties over the rest of the year. In contrast, livestock related activities may give a daily flow of income as in the case of dairies, poultry and fisheries. A weekly income in the case of beekeeping sericulture, etc. and a fortnightly or monthly income, in goat and sheep rearing, is possible In other words, the livestock economy is itself a source of insurance for farmers in that it provides a diversified source of income and mitigates the uncertainties of seasonal income. Download 0.68 Mb. Share with your friends:
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