Context

The increasing Farmer distress due to abnormal climatic conditions, since last few years have continuously hurting food security and leaving farmers in a bad condition.

About

• The three-year La Nina with El Nino makes an entry in 2023 by July.
• In the beginning of 2022, extreme rainfall and cold waves dashed that hope by damaging standing crops.
• While the world was entering into a severe food crisis as the Russia-Ukraine war started, Indian farmers had their own battles to fight.
• With the early heat hitting in the month of February has destroyed the Rabi crops, further deteriorating the condition.

Impacts:

During El Nino Year:

During La Nina Year:

El Niño resulting in deficit rainfall which tends to lower the summer crops production such as rice, sugarcane, cotton and oilseeds and therefore the outcome might be seen in form of high inflation rates and lower GDP due to high contribution of agriculture sector in Indian economy. El Niño events are mostly associated with warm and dry conditions in southern and eastern inland areas of Australia, as well as Indonesia, Philippines, Malaysia and central Pacific islands such as Fiji, Tonga and Papua New Guinea. Previously El Niño had a strong association with droughts in India but this relationship has been weekend in recent years. El Niño conditions mostly coincide with a period of weak monsoon and rising temperatures in India and thus the probability of drought occurrence surges during El Nino events that could be disturbing for Indian crop production and water supply.

The La Nina could have negative impacts on Indian agriculture.  Farmers will be at risk of losing their standing kharif crops if it rains during this period. The harvesting of the kharif crops begins from September-end or early October. La Niñas normally raises crop prices and create more fluctuations in energy markets, especially with the record-breaking prices Spring freezes are more common during La Niña, especially in the Great Lakes region, thanks in large part to cooler Great Lakes temperatures and fluctuating jet stream patterns During winter, the corn belt will have some very strong, severe storms In general, more rainfall can be expected.

Where is the safety net for farmers?

• Marginal and small farmers, as per the 2015-16 agriculture censuses, account for 86% of total farmers in India and are the most vulnerable to extreme weather events.
• National Bank for Agriculture and Rural Development (NABARD) has also underlined the poor performance of crop insurance.
  • In a book published recently, NABARD has argued that crop insurance is no longer a “perfect medication” for farmers hit by natural calamities.

Government Interventions:

Pradhan Mantri Fasal Bima Yojana (PMFBY):

• Launched in 2016 and is being administered by the Ministry of Agriculture and Farmers Welfare.
• Replaced the National Agricultural Insurance Scheme (NAIS) and Modified National Agricultural Insurance Scheme (MNAIS).
• Aim: To provide a comprehensive insurance cover against the failure of the crop thus helping in stabilising the income of the farmers.
• Scope: All food & oilseed crops and annual commercial/horticultural crops for which past yield data is available.
• Premium: The prescribed premium is 2% to be paid by farmers for all Kharif crops and 1.5% for all rabi crops. In the case of annual commercial and horticultural crops, the premium is 5%.
  • Premium cost over and above the farmer share was equally subsidized by States and GoI.
  • However, GoI shared 90% of the premium subsidy for North Eastern States to promote the uptake in the region.
• Implementation: By empanelled general insurance companies. The selection of the Implementing Agency (IA) is done by the concerned State Government through bidding.
• PMFBY 2.0: The revamped PMFBY is often called PMFBY 2.0, it has the following features:
  • Completely Voluntary: Enrolment 100% voluntary for all farmers from 2020 Kharif.
  • Earlier, it was compulsory for loanee farmers availing Crop Loan/Kisan Credit Card (KCC) account for notified crops.
  • Limit to Central Subsidy: The Centre has decided to limit the PMFBY premium rates - against which it would bear 50% of the subsidy - to a maximum of 30% in un-irrigated and 25% in irrigated areas.
  • More Flexibility to States: The government has given the flexibility to states/UTs to implement PMFBY and given them the option to select any number of additional risk covers/features.
  • Investing in ICE Activities: Insurance companies have to now spend 0.5% of the total premium collected on information, education and communication (IEC) activities.

Restructured Weather Based Crop Insurance Scheme:

• Launched in 2016 and is being administered by the Ministry of Agriculture and Farmers Welfare.
• Aim: To mitigate the hardship of the insured farmers against the likelihood of financial loss on account of anticipated crop loss resulting from adverse weather conditions relating to rainfall, temperature, wind, humidity etc.
• Parameter: WBCIS uses weather parameters as “proxy? for crop yields in compensating the cultivators for deemed crop losses.