Agricultural Pricing and Crop Insurance Issues

The farmers in India face severe problem in marketing their crop produce after harvest due to lack of remunerative prices for the end-products. Several times, the farmers are forced to opt for distress sale leaving them in a vulnerable condition due to poor market prices. It is really unfortunate to find some section of farmers’ vulnerability to higher cost of cultivation accompanied by the unreasonable market prices. The situation is alarming in case of pulses like black gram, green gram and red gram, and commercial crops like cotton, tobacco and chilli. Globalization has brought openness in trade, but it could not ensure better market prices. Hence there is a need to regulate the agricultural marketing policy for the welfare of the farming community, which in turn would facilitate food security in India. The Commission for Agricultural Costs and Prices (CACP) may decide the policy related to market prices of crops in India, in a manner which would fetch better returns to the farmers. CACP presently determines the level of minimum support prices of different agricultural crops by taking into consideration factors like cost of production, changes in input prices, input–output price parity, trends in market prices, demand and supply, inter-crop price parity, effect on industrial cost structure, effect on cost of living, effect on general price level, international price situation, parity between prices paid and prices received by the farmers and effect on issue prices and implications for subsidy. In this context, it is heartening to note that the minimum support price for cereals like rice and wheat, and pulses like black gram and green gram has been enhanced in the recent years. However, with the significant increase in cost of cultivation of food grains, the enhancement of minimum support prices at frequent intervals would be highly essential. Otherwise, the farmers may shift from cultivation of cereals and pulses to non food grain crops, which certainly poses a severe threat to food security in India. Natural hazards like floods and droughts occur frequently in India challenging crop productivity and food security. Hence the farmers must be provided with comprehensive crop insurance policy so that in the event of unforeseen climatic aberrations like cyclones and floods, they would be provided with compensation. Though Government of India has initiated efforts for providing crop insurance to farmers since independence, a major boost was given in the form of Comprehensive Crop Insurance Scheme (CCIS) in 1985 during the Seventh Five Year Plan period, which covered the risk in cultivation of major crops against natural calamities and pests and diseases The National Agricultural Insurance Scheme (NAIS) which is also known as the Rashtriya Krishi Bima Yojana replaced CCIS in 1999–2000. NAIS operates in all States and Union Territories of India. Insurance coverage and financial support to farmers would be given in the event of failure of any of the notified crops as a result of natural calamities, pests and diseases. NAIS is implemented by the Agriculture Insurance Company of India Ltd (AIC) and the scheme helps the farmers to adopt new and innovative farming practices and scientific modern technology. It is promoted by General Insurance Corporation of India, National Bank of Agriculture and Rural Development (NABARD), United India Insurance Company Limited, National Insurance Company Limited, Oriental Insurance Company Limited and The New India Assurance Company Limited and it is directly controlled by the Ministry of Finance, Government of India. The number of farmers covered under NAIS has increased from 9.08% in 2000 to 15.95% in 2007. Similarly, the percentage of gross cropped area covered under insurance has enhanced from 8.73 in 2000–2001 to 14.58 in 2007–2008, which is significant. New trends in globalization Though globalization undoubtedly brought several positive changes like technology development and transfer, faster communication and transport and higher growth in the services sector, it has also resulted in challenges like more volatility in the financial markets and severe competition among the entrepreneurs and growth inequity among various sections of the society. One of the consequences of globalization in India is the openness in trade. Thus, the rich have access to initiate global ventures where the poor would restrict themselves to localized works. As the protective policies are discouraged in post globalized world, the poor have little opportunity to compete with the rich leading to inequality and this concerns to food security in India. The implications of globalization for a national economy in India are quite remarkable. Globalization has certainly intensified interdependence and competition between economies in the world market, which is clearly reflected in new course of trading in goods and services. As a result, economic development in India is not determined exclusively by its domestic policies and market conditions. Moreover, they are influenced by both domestic and international policies and economic conditions. In other words, this would restrict the policy options available to the government and also results in loss of policy autonomy to some extent at the national level. The impact of globalization in India culminated in the establishment of special economic zones (SEZs) which also led to widening the gap between the rich and poor sections.

Leave a Comment

Your email address will not be published. Required fields are marked *