Weather based Crop Insurance Scheme (WBCIS)

Q1: What is Insurance?

Insurance is a tool to protect you against a small probability of a large unexpected loss. It is a technique of providing people a means to transfer and share risk where losses suffered by few are met from the funds accumulated through small contributions made by many who are exposed to similar risks. Insurance is not a tool to make money but a tool to help compensate an individual or business for unexpected losses that might otherwise cause a financial disaster.

Q2: What is Crop Insurance?

Crop insurance is a means of protecting the agriculturist against financial losses due to uncertainties that may arise from crop failures/losses arising from named or all unforeseen perils beyond their control.

Q3: What is Weather based Crop Insurance?

Weather Based Crop Insurance aims to mitigate the hardship of the insured farmers against the likelihood of financial loss on account of anticipated crop loss resulting from incidence of adverse conditions of weather parameters like rainfall, temperature, frost, humidity etc.

Q4: How is Weather Insurance different from crop insurance?

While Crop Insurance specifically indemnifies the cultivator against shortfall in crop yield, Weather based Crop Insurance is based on the fact that weather conditions affect crop production even when a cultivator has taken all the care to ensure good harvest. Historical correlation studies of crop yield with weather parameters help us in developing weather thresholds (triggers) beyond which crop starts getting affected adversely. Payout structures are developed to compensate cultivators to the extent of losses deemed to have been suffered by them using the weather triggers. In other words, Weather based Crop Insurance uses weather parameters as ‘proxy’ for crop yields in compensating the cultivators for deemed crop losses.

Q5: What is Weather based Crop Insurance Scheme (WBCIS)? How is itdifferent from National Agriculture Insurance Scheme (NAIS)?

Weather based Cro is a unique Weather based Insurance Product designed to provide insurance protectiop Insurance Scheme (WBCIS)n against losses in crop yield resulting from adverse weather incidences. It provides payout against adverse rainfall incidence (both deficit & excess) during Kharif and adverse incidence in weather parameters like frost, heat, relative humidity, un-seasonal rainfall etc. during Rabi. It is not Yield guarantee insurance.

MSP

                              

• The Minimum Support Prices were announced by the Government of India for the first time in 1966-67 for Wheat in the wake of the Green Revolution and extended harvest, to save the farmers from depleting profits. Since then, the MSP regime has been expanded to many crops. 
• Minimum Support Price is the price at which government purchases crops from the farmers, whatever may be the price for the crops.  The MSP is announced by the Government of India for 25 crops currently at the beginning of each season viz. Rabi and Kharif. Following are the 25 crops covered by MSP: 
• Kharif Crops:

                   Paddy,Jowar ,Bajra , Maize ,Ragi, Arhar(Tur), Moong ,Urad ,Cotton ,Groundnut 

                   Sunflower Seed, Soyabeen, Black Sesamum ,Nigerseed 

• Rabi crops:

                  Wheat, Barley ,Gram, Masur (Lentil) ,Rapeseed/Mustard ,Safflower, Toria 

• Other Crops 

                  Copra ,De-Husked ,Coconut ,Jute ,Sugarcane

• Rationale If there is a fall in the prices of the crops, after a bumper harvest, the government purchases at    the MSP and this is the reason that the priced cannot go below MSP. So this directly helps the farmers.

•  How MSP is decided? The government decided the support prices for various agricultural commodities after  taking into account the following: Recommendations of Commission for Agricultural Costs and Prices Views of State Governments Views of Ministries 

• Other relevant factors. Note: Price Support Scheme (PSS) for Oil seeds and Pulses The Department of Agriculture and Cooperation implements the Price Support Scheme for Oil Seeds and Pulses through the National Agricultural Cooperative Marketing Federation of India Ltd.(NAFED).NAFED is the nodal procurement agency for Oilseeds and pulses, apart from the Cotton Corporation of India. So, when the prices of oilseeds, pulses and cotton fall below MSP, NAFED purchases them from the farmers.

NAFED

1. National Agricultural Cooperative Marketing Federation of India Ltd.(NAFED) was established 2nd October 1958. Nafed is registered under the Multi State Co-operative Societies Act. (see text box) Nafed was setup with the object to promote Co-operative marketing of Agricultural Produce to benefit the farmers. 
2. Agricultural farmers are the main members of Nafed, who have the authority to say in the form of members of the General Body in the working of Nafed. 
3. The Department of Agriculture and Cooperation is implementing a Price Support Scheme (PSS) for the procurement of oilseeds and pulses at the Minimum Support Price (MSP) declared by the Government, through NAFED, which is the central nodal agency for this purpose. NAFED is the national level marketing agency for agricultural products in the Cooperative Sector. 
4. The core objective of NAFED is to organise, promote and develop marketing, processing and storage of agricultural, horticultural and forest produce, distribution of agricultural machinery, implements and other inputs, undertake inter-State, import and export trade,
5. wholesale or retail as the case may be and to act and assist for technical advice in agricultural production for the promotion and the working of its members and cooperative marketing, processing and supply societies in India. 
6. (NAFED website) NAFED and Multi State Cooperative Societies Act 1984 'Cooperative Societies' is a State Subject i.e. they are listed in the State List). So the cooperative societies formed under State Acts have to restrict their activities to only one State.
7. So, this is a road block to Multi State Cooperative Societies. To overcome this hurdle, Multi State Cooperative Societies Act was passed in 1942, which was replaced by a Multi State Cooperative Societies act 1984 . 
8. This 1984 Act was later replaced by 2002 Act. This act makes provision for creation of Federal Cooperative Societies.