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ECONOMIC ANALYSIS OF CROP INSURANCE SCHEMES AND PAYOUTS IN SUSTAINING RICE PRODUCTION DUE TO CLIMATE CHANGE IN THE KRISHNA RIVER BASIN OF ANDHRA PRADESH

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Title ECONOMIC ANALYSIS OF CROP INSURANCE SCHEMES AND PAYOUTS IN SUSTAINING RICE PRODUCTION DUE TO CLIMATE CHANGE IN THE KRISHNA RIVER BASIN OF ANDHRA PRADESH
 
Creator ASHOK BALIRAM, BABAR
 
Contributor RAGHUNADHA REDDY, G
 
Subject insurance, crops, crop insurance, rice, marketing, precipitation, environmental degradation, economics, area, policies
CROP, INSURANCE, RICE
 
Description The agriculture is subjected to vagaries of adverse weather conditions which
result in volatility in farm production and income which in turn may adversely influence
the food security of nation. Hence, there is need to give adequate attention to tackle the
problems arising from different risks such as production risk, price risk, financial risks
etc. Risk management strategies like different financial risk transfer products will
provide resilience mechanism system in agriculture and will enable to continue
agricultural production over extended period of time.
The objectives formulated for assessing the role of crop insurance in sustaining
paddy production are as follows:
1. to study the present status of the insurance schemes in the study area and analyse
the major constraints faced by the farmers and insurance companies,
2. to assess the farmers’ willingness to pay for the weather based crop insurance and
the factors responsible for it, and
3. to establish distribution for payouts structure and rainfall insurance policies
offered to farmers in the study area.
The study was conducted in Nagarjunasagar Right Canal (NSRC) command area
of Guntur district and pertains to the agricultural year 2010. Both primary and
secondary data were used for present study. Multistage sampling design was adopted to
obtain a representative sample of 240 paddy farmers and primary data were collected
through a well structured interview schedule. The Double bound dichotomous model of
contingent valuation method was used to elicit farmers Willingness-to-Pay (WTP) for
weather based crop insurance scheme (WBCIS). Statistical tools used in data analysis
were compound growth analysis, loss ratio, break-even ratio, arithmetic mean, standard
deviation, frequency and percentage, percentile and percentile ranks, and log-likelihood
model. The log-likelihood model was estimated using ‘STATA’ data analysis software
tool pack which uses a maximum likelihood method of estimation.
The study revealed that farmers do not have in-depth awareness about crop
insurance scheme. The coverage of non-loanee farmers in the state was very low as
compared to loanee farmers. The financial viability of National Agricultural Insurance
Scheme (NAIS) is very poor as it assumes loss ratio greater than ‘one’ for overall figure
and for paddy alone in state but the financial viability of scheme is considerably good in
Guntur district. The compound growth rate in number of paddy farmers and paddy area
covered under NAIS is low in state and need to increase it. More number of farmers are
not interested to take part in crop insurance as it does not pay out even if farmers incur
yield loss. Distribution of payouts’ structure of WBCIS for red chilli (irrigated) is such
that it pays out in extreme weather events of heavy rains, severe drought and high
relative humidity over extended period of time. The farmers’ WTP for WBCIS scheme
is about 4.73% of sum insured for paddy. Among the major factors affecting farmers’
WTP are farmer age, education and awareness about crop insurance.
The present study suggests for re-insurance facility for Agriculture Insurance
Company of India Ltd. (AIC) from government, mass awareness programme planning,
no-claim bonus for the farmer if insured farmer was not eligible to get compensation for
consecutive three years, revision of NAIS structure, revision of strike levels and
distribution of compensation per ‘mm’ deficit or excess rainfall in WBCIS, and fixing
premium rates for WBCIS at around 5% of sum insured.
 
Date 2016-06-04T10:12:34Z
2016-06-04T10:12:34Z
2011
 
Type Thesis
 
Identifier http://krishikosh.egranth.ac.in/handle/1/66750
 
Language en
 
Relation D9037;
 
Format application/pdf
 
Publisher ACHARYA N. G. RANGA AGRICULTURAL UNIVERSITY