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Green Revolution Indian agriculture is undergoing a rapid change particularly since midsixties i.e. from the on-set of Green Revolution. Therefore, we have witnessed a white Revolution marking a tremendous increase in the milk production. Our horticulture, which includes fruit production, floriculture and vegetable production is also making a tremendous heading and it is said that yellow Revolution is in the sight. If we analyse this changing scene in agriculture, we can notice that the traditional agriculture. Which was a way of life for our farmers is now becoming a business proposition. In the traditional farming there was no much change in the cropping pattern, cultivation practices etc. It was based on the experiences transmitted from father to the son. However, with the developments taking place due to five-year plans and technologies developments in agriculture, traditional farming is changing into modern farming. Traditional farming is slowly becoming absolute and uneconomic. Traditional farming was more or less self-sufficient. No, farming is becoming market oriented. The needs of the farmers are increasing. He has to purchase many things such as high yielding seeds, fertilizers, pesticides, machinery etc. from the market. As a result, his investment and financial needs are increasing. Naturally, he has to produce and get income to meet the costs and also to make some profit. This, the costs, returns, markets, profits of the enterprise become significantly important. This is nothing but Agri-economics. With increasing population, rapid urbanization and growing export markets, the demand for farm products is increasing and is likely to increase in the near future. However, the competition is also likely to increase. The consideration of economic aspects in the production process is inevitable. As indicated above, there has been a technological break-through in agriculture in recent years. New non-traditional crops, new varieties of

crops, new methods of cultivation are coming in very fast and farmers are adopting the same. A large number of farm products are being produced for exports. However there are specifications about the size, color, quantity, taste, packaging etc. Which farmers should know. Farmer has to consider all these aspects and consider the costs and returns before entering into the venture. Farmer has several enterprises (such as crops, dairy, and poultry) on the farm. He has to consider the economics of each enterprise separately also of the farm as a whole. It helps in decision making and proper planning of the farm. Now, the time has come that every activity on the farm has to be viewed from the perspective of economics. Along with the adoption of new technology in farming, the problems faced by the farmers fare also increasing. There are problems of soil and water management, choice of crops, technical know-how, pests and diseases, natural hazards, marketing, finance, surplus production, price fluctuations and so on. In finding the solutions for these problems, economic criteria are to be applied. India is a vast country with varied climate, soils, and ecological conditions. In addition to this, individual farmer is having his own set up of resources and socio-economic situation. In solving the problems of individual farmers all these situational factors are to be taken into account. An important ray of hope, which one can notice in this complex changing scenario of agriculture, is that a new generation of farmers who are more educated, young and energetic have taken up to this enterprise. In addition, many non-farming community entrepreneurs are also attracted towards agriculture. They are very keen on getting more knowledge about the new technology. Many of them are innovative and experimenting of their own. Naturally, they are more economics oriented.

Land Resources In economics `Land is used in a broader sense to include all gifts of nature such as soil, sunshine, rain, wind, water, etc. Land a basic factor of production is limited in nature and has to be operated in a given natural environment. Though, man has made a tremendous progress in science, the basic importance of land has not been reduced at all. On the contrary, because of increasing population, we are required to pay more attention to it by way of proper use and good management.

India possesses 329 million hectares of geographical area of which only 136 million hectares (41 percent) is the net agricultural land. Only about 20 percent of the total area is covered under forest. In the course of development and progress, because of increasing needs of human beings, man started using this valuable resource because of ruthless destruction of forest, problems of soil erosion, pollution, rainfall, etc. became severe. Increasing demand for food, fuel and other amenities added to this misuse further, several factors affect the productive value of land, sustainable use of land is now the basic consideration.

Land Tenure Systems Land Tenure Meaning: Land tenure refers to the way in which land is held by an individual from the Government. It shows the relationships between the land holder and the State. The absolute ownership of land rests with the Government. Government gives proprietary rights to individuals or communities. Thus, whom we call a land owner, is in that sense is the proprietor of that land and he has to pay land renew for that.

Land Tenure Land Tenure means, how the land (which ultimately belongs to Government) is held by the landholder or operator. For their convenience, British Govt., introduced exploitative tenure systems like Zamindari, Mahalwari, in very large areas of the country. However, a good system like Rayatwari was introduced only in 2 states viz. Bombay and Madras. Soon after independence, Zaminderi Abolition Acts were passed in different States and lands were given to the tillers of the soil. Similarly, Tenancy Acts were passed in order to stop the exploitation of tenants by the landowners (holders).

Need for ceiling on Land Holdings Data on distribution of land holdings in the country clearly indicate that there is disparity and inequality. Large number of cultivators owing relatively less land, while big land owners, smaller in number owning

larger acreages of land. It leads to disparities in the incomes in the rural areas. In view of this, our leaders in the earlier days thought of this land reform measure. The first five-year plan mentions where land is managed directly by the substantial owners and there are no tenants in occupation, public interest requires that there should be an absolute limit to the amount of land which any individual may hold. Prof. D.R.Gadgil, in the report of the Committee of Panel on Land Reforms mentions that Among all resources, the supply of land is the most limited and the claimants for its possession are extremely numerous. It is therefore, obviously unjust to allow the exploitation of any large surface of land by single individual unless other overwhelming reasons make this highly desirable. Moreover, in the context of the current socio-political climate, redistribution of land would rather appear to be imperative. The ceiling on land holdings was intended to: i) meet the land needs of the landless ii) reduce the glaring inequalities in land ownership so that it may lead to development of cooperative rural economy, and iii) enlarge self-employment in owned land as distinguished from subletting and tenant cultivation. Ceiling legislations and amendments The Ceiling legislations were initiated in many parts of the country in the late 50s and early 60s. Jammu and Kashmir was the first state in the country to pass this Act. It was followed by West Bengal and Himachal Pradesh States. Maharashtra State passed this Act in 1961. However, the progress of ceiling legislation was disappointing till 1972. It was found that only about 23 lakh acres of land was declared surplus. Of this, only about 13 lakh acres were redistributed. In Bihar, Karnataka, Orissa and Rajasthan, no land was declared surplus. It was mainly due to partitioning of land or Benami transfers. This brought in lot of criticism in the Chief Ministers conference held in July, 1972. The conference suggested new guidelines which are summarised below: i) The best lands in a state with assured irrigation for two crops in a year should have ceiling in the range of 10 to 18 acres, taking into account the fertility of the soil and other conditions. ii) In case of inferior lands, ceiling may be higher but should not exceed 54 acres.

iii) The unit of application shall be family of five members, the term family being defined as to include husband, wife and three minor children. Where the number of members in the family exceeds five, additional land may be allowed for each member in excess of five in such a manner that the total area admissible to the family does not exceed twice the ceiling limit for family of five members. iv) The ceiling should not operate on land held under tea, coffee, rubber, cardamom and cocoa. v) Ceiling should not operate on land held by industrial or commercial undertakings for non-agricultural purposes. vi) State Governments may, in their discretion, grant exemption to the existing religious, charitable and educational trusts of Public nature. vii) In the distribution of surplus land, priority should be given to landless agricultural workers, particularly to those belonging to the scheduled castes and the scheduled tribes. viii) Compensation payable for the surplus land on imposition of ceiling laws should be fixed well below the market value of the property so that it is within the capacity of the new allottees. ix) The compensation may be fixed in graded slabs and preferably in multiples of land revenue payable for the land. The amended ceiling laws were to be given retrospective effect from a date not later than January 24, 1971. As per the new guidelines, 17 states amended the ceiling legislations. The range of ceiling varied from State to State. For instance, in Andhra Pradesh, the level of ceiling for dry land ranged from 14.16 hectares to 21.85 hectares. Karnataka had the limit of 21.85 hectares for dry land, while Punjab had 20.50 hectares and West Bengal 7.00 hectares. For irrigated lands with two crops, the limit was lower Andhra Pradesh 4.05 to 7.28 hectares, M.P, Maharashtra 7.28 hectares, Punjab 7 hectares, West Bengal 5.0 hectares. The compensation pattern also varied from State to State. However, in many States it was the multiple of assessment. It was payable in bonds, cash or a combination of the both. Progress: By the end of June, 1992, 72.31 lakhs acres of land was taken possession of. However, only 49.75 lakh acres were actually distributed to 47.49 lakh beneficiaries.

One of the reason among many of them, for the tardy progress of land ceiling legislations is the litigations. It is also said that the ceiling legislations were not implemented properly. Ladenjinksky, an expert on land reforms, has remarked that, while officially the states accepted the ceiling programmes, they rejected them in practice.

Agricultural Policies Price Policy : It is well known that, in India, prices of agricultural commodities fluctuate from time to time. It is mainly due to factors like supply (seasonal production) situation, many times affected by vagaries of nature, hoarding by the traders, etc. While the demand remains more or less constant. Another important reason is that there is no control over the acreage under a particular crop. Cultivators are free to have any acreage i.e. any amount of production. These fluctuations in prices adversely affect both farmers and the consumers. Price stability is necessary for the progress of agriculture. Stable prices means that the prices should be beneficial to both producers and consumers. In order to bring in stability in prices of agricultural commodities, Govt. adopts three important measures viz. Minimum support price, Buffer stock, and in exceptional circumstances, the import of the commodity.

Credit Policy In modern farming, credit has become one of the crucial inputs. The cooperative credit societies was, in the past and even now, the most important source of credit to the farmers. Since 1969, commercial banks are also financing agriculture because of `social control. There has been tremendous increase in the bank branches in the rural areas, Govt. has adopted the policy of `multi-agency approach in agricultural credit,. At present, primary agricultural co-operative societies, land development banks, commercial banks and regional rural banks are financing agriculture. National Bank for Agriculture and Rural Development (NABARD) is providing refinance to the commercial banks. In order to reduce the competition amongst the commercial banks in the rural areas, a policy of "Service Area Approach" has been adopted since 1988. As per this policy, each bank has to adopt few villages and they are required to meet credit.

Farm Credit in the Past and the Present: In the past, farming was carried out in a traditional way. It was a subsidence farming and was more or less self sufficient Credit needs of the farmers were limited and were met with mostly by the money lenders, relatives, friends and to some extend by Taccavi loans from Government. Money lenders used to exploit the farmers in various ways like exorbitant rates of interest, false documents, etc. After independence and particularly after the Green Revolution, agriculture entered the era of modernisation and the credit needs of the farming community started increasing. In the present day market oriented farming, the credit has become one of the crucial inputs. Co-operative Credit: Co-operative Credit Societies Acts of 1904 and 1912 was the first important land mark in the agricultural credit policy in India. In the subsequent period, the co-operative credit became more and more significant. It became the most important source of farm credit in the country. It was the result of the policy to have progressive institutionalization for supply of cheaper and adequate credit to agriculture. Slowly, the importance of money lenders was reduced. Social Control on Commercial Banks (1969): The agricultural credit policy took another significant turn in 1969. In this year, Govt.of India nationalised 14 major commercial banks and imposed `Social Control' on them. Hitherto the commercial banks were not financing agriculture. As per the new policy, they were made to provide finance to agriculture on priority basis. Consequently, many commercial banks opened their branches in the semi-urban and rural areas. Multi-agency approach: Another important feature of the credit policy since independence is the "multi-agency approach". Farmers are a liberty to avail finance from any of the credit institutions. At present, the major institutional agencies supplying credit to farmers and rural weaker sections are -Commercial Banks, Primary Agricultural Co-operative Credit Societies, Land Development Banks and Regional Rural Banks. In addition, National Bank for Agriculture and Rural Development (NABARD) is refinancing in a big way the banks for different agricultural development projects like lift Irrigation Schemes, etc. The success of agricultural production programme depends upon the supply of credit. Under the strategy of multi-agency adopted by the Government, the above named credit institutions are providing credit to

cultivators in general and weaker sections in particular. Because of this, the activities of the money lenders and their exploitation particularly of the weaker sections in the rural areas has been drastically reduced in the recent years. Classification of credit: Agricultural credit has been classified into three categories viz.short-term credit (crop loan), medium-term credit and long-term credit. This classification is based on the periods for which the loan is given. This is to meet the varying needs of the farming community. The short term loan which is also known as the crop loan, is provided for 15 month period and is meant for meeting the needs like seed, fertilizer, labour, cattle feed, etc. The farmer can repay the loan after harvest of the crop. The period for medium term loan is from 15 months to five years. These loans are provided for meeting the expenses on land improvements, digging of wells, purchase of implements and machinery, farm animals, etc. These items require relatively more investment and as such the period for repayment is kept upto 5 years. The long term credit as the name indicates is for longer period than 5 years. This type of credit is given for activities requiring heavy investment. The Land Development Banks provide only the long term finance; while the Regional Rural Banks give loans only to the weaker sections like small and marginal farmers, agricultural labourers, village artisans, etc. The Problem: Mounting overdues is the serious problem faced by these financing institutions in the rural areas. This is an obstacle in the recycling of funds with the credit institutions. New Policy in the Rural Credit for Banks: As indicated earlier, after 1969, there was a rapid spread of branches of commercial banks in the rural areas. As a result, there was duplication of efforts and scattered lending over wider areas. In order to avoid this, a new policy was adopted in 1988 which is known as the"Service Area Approach". Under this policy, each semi-urban and rural branch of commercial bank is assigned a specific area comprising of a cluster of villages within which it will operate. Thus, the compactness in the area of operation will make it easy for the clientele to approach the bank for credit. It will also help the bank in credit planning and monitoring of the Funds. The banks are supposed to prepare annual credit plans for all the adopted villages.

Marketing Policies With the developments taking place, agriculture is becoming more and more market oriented. It is said that Production, Processing and marketing are the 3 pillars of the agricultural economy in India. Basically, agricultural production is scattered and is a small-scale production, which create problems of marketing. In addition, the infrastructure facilities like roads, means of transport, storage facilities, etc. are scarce on our rural areas. In India, there are large number of markets which are not regulated under the Marketing Acts. The regulated markets are very few in number. The unregulated markets are in the hands of commission agents or Dalats. There are many defects in these markets, they charge high commission, no open auction `( hatta system), no proper weighment, umber of deductions, no prompt payment, etc. Co-operative marketing is another remedy for ills in agricultural marketing which is gaining importance in some areas. They are also arranging for exports.

Importance of Marketing and Peculiarities of Agricultural Produce: With the developments that are taking place in recent years, agriculture in India is becoming more and more market oriented. With the onset of Green Revolution and Subsequent White Revolution, the problems of marketing are becoming more serious. It is said that production, processing and marketing are the three pillars of the agricultural economy in India. Before we deal with the marketing policies, it is necessary to throw some light on the peculiarities of the agricultural produce. In the first place, the volume of agricultural produce is larger in relation to its price. Another important characteristic is the perishable nature of agricultural produce. Milk, Vegetables, Fruits, etc. are more perishable and are required to reach to the Consumers as quickly as possible. Even the grains, if not dried and stored properly are attacked by the store grain pests in a few days. Infrastructure facilities such as roads, transport, storage, etc are very much inadequate in our rural areas. Small holdings and large number of producers scattered over a wider area, is another feature. All these peculiarities create problems in marketing of agricultural produce. Defects in the Marketing of Agricultural Produce

We have already referred to the problems such as small holdings resulting in small quantities of marketable surplus and lack of infrastructure facilities. In addition, our farmers usually do not grade their produce. As a result, they do not get remunerative price. At present, major of our markets are unregulated and are dominated by the Commission agents, brokers or `Dalals. In these markets, many a times, there is no open auction. The price is fixed by the Commission agent and the retailers (Purchaser) under the cover of cloth by making signs on the palm (Hatta system). Thus, even though the farmer is present there, he cannot know the real price at which his produce is sold. The Commission agents exploit the farmers by using many fraudulent means. They charge heavy commission, use faulty weights and measures and have number of deductions. Farmers also lack in information about other markets and prices prevailing there. Measures adopted by Government to improve the Marketing: Government has taken various steps to improve the conditions of agricultural marketing in the country. Attempts are made to improve the roads and communication facilities in the rural areas thorough the development programmes under Five year Plans, Central and State Warehousing Corporations encourage construction of warehouses and godowns village Co-operative societies are given necessary technical and financial help for construction of godowns. Farmers can store their produce in these warehouses and can get loans on that security. Food grains prices are stabilized by declaring the Minimum Support Prices for the selected commodities, before the sowing season. The Department of Marketing, Govt.of India, had undertaken `Marketing Surveys for various commodities. These surveys brought out the problems of marketing and suggested the remedial measures. These Surveys served as the basis for the policies in the subsequent period. In the field of grading and standardization under the `Agricultural Produce (Grading and Marketing) Act, grades and standards are fixed for may goods like ghee, flour, eggs, etc. The graded goods are given a seal "AGMARK" by the Agricultural Marketing Department. For testing purpose, quality control laboratories are also established. Two significant remedies for many ills in the marketing of agricultural produce, are the Regulated Markets and the Co-operative Marketing, which we discuss below in brief. Regulated Markets:

The regulated markets are established as per the provisions of the `Marketing of Agricultural Produce Acts of the State Government. The Commodities with which the market will deal, are also declared. Regulated markets aim at the development of marketing structures to ensure remunerative prices to the producers and to narrow down the price spread between the producer and the consumer. It also aims at reducing the non-functional margins of the commission agents. For controlling the activities of the marketing, there is a `Market Committtee. The Committee consists of representatives of the farmers, commission agents and the Government nominees. The complete management of the market rests with the `Market Committee. The Committee issues licences to the Commission Agents, weighmen, and other functionaries. The rate of Commission to be charged is fixed by the Committee. Weighment is done properly by the weighmen appointed by the Committee. There is an arbitration Sub-Committee to look into the grievances of the farmers. With the establishment of regulated markets, many fraudulent practices of the brokers are observed in the unregulated markets are overcome and the farmers get reasonable price for their produce. Not only this, amenities like rest house, place for parking of vehicles, cold-storages, etc. are also created in the market yards for the benefit of the farmers. In this respect, Government Policy is to have rapid expansion of the regulated markets in the country. Co-operative Marketing: Prior to 1954, separate co-operative marketing societies were established as distinct from the co-operative credit societies. However, since 1957, policy was adopted to have `Multipurpose Co-operative Societies" undertaking both functions of supply of credit as well as marketing of agricultural produce. The co-operative marketing societies can link credit, farming, marketing and processing to the best advantage of the farmers. It can have its own storage and warehousing facilities. The most important advantage of the co-operative marketing is that it can eliminate many of the middleman and their profit margins. The co-operative marketing societies can link credit, farming, marketing and processing to the best advantage of the farmers. It can have its own storage and warehousing facilities. The most important advantage of the co-operative marketing is that it can eliminate many of the middlemen and their profit margins. The co-operative marketing society can also undertake supply of inputs such as seeds, fertilizers, implements, etc required by the farmers. Thus, co-operative marketing is the best method to reorganize rural marketing and to promote planned growth of our rural areas.

At present, there are over 60,000 primary co-operative marketing societies of which 3500 are special commodity marketing societies. At the district level, there are 160 Central Marketing Societies. At the State level, there are 29 general purpose State Level Co-operative Marketing Federation. (NAFED). In additions, there are 8 State Level Trade Cooperative Development Corporations/Federations. In 1990-91, the co-operative marketing societies marketed agricultural produce worth Rs.6300 crores. Punjab, Maharashtra, Uttar Pradesh and Gujarat States accounted for 75 per cent of the total value of the agricultural produce marketed by co-operatives. The three major commodities which accounted for about 75 percent of the total sales are foodgrains, sugarcane and cotton. The co-operatives have made a good progress in recent years in the field of agricultural processing. The co-operative sugar factories in Maharashtra have made tremendous progress. Similar, is the case of co-operative dairy development. The National Co-operative Development Corporation (NCDC) was established in 1963 under the Act of Parliament, with the object of planning and promoting programmes for the production, processing, storage and marketing of agricultural produce and notified commodities through co-operative societies. The Corporation has initiated number of new schemes for which assistance is provided to the State Governments.

Subsidies and Incentives There are number of subsidies and incentives given to agricultural sector by the Central Govt. as well as the State Govt. In underdeveloped countries, these subsidies and incentives are necessary in many ways. It is difficult to list out all the subsidies (direct/indirect) and incentives. Apart from fertilizer, food, fuel, electricity subsidies, there are number of schemes under which subsidies and incentives are given to those who participate in these schemes. Horticultural Development Scheme in Maharashtra, Cold Storage Units, Drip/Sprinkler irrigation, processing units, rural industries, etc. are some of the examples.

Food Growth Policy Even though, we are self sufficient in food today, with increasing population food needs are also increasing. It is also said that our

agricultural production is not increasing, at a faster rate as in the past, and we need another `Green Revolution in the Country. Steps are being taken to increase the use of high yielding varieties, balanced use of fertilizers, integrated pest management, etc. Not only the irrigation facilities are increasing, the emphasis is placed on the proper use of water. In scarcity areas, use of sprinkler/drip irrigation is encouraged. Soil and Water Conservation measures are being adopted on substantial scale. Subsidies, incentives, minimum support prices are also the measures ultimately encouraging increased food production. Scientists are confident that we would be able to maintain food security and food production in the Country in the near future.

Export Import Policy India adopted a new liberalized Trade policy in 1991. It basically aimed at cutting down the administrative controls and barriers which acted as obstacles in the free flow of exports and imports. Since liberalization, several measures are adopted from time to time to increase exports. Many incentives and encouragements are given for boosting the exports. Agriculture Commodities form a significant part of our experts. Indias import policy is liberalized in recent years. Restrictions on many commodities are lifted. However, our import policy contains clear-cut measures to expand our exports.

Development Economics The concept of development involves several aspects such as productivity, capital formation, income, technology, etc. In simple terms, development means increase in the per capita real income. According to World Bank Survey, India ranks far below in the list and such it is treated as a developing country. Soon after independence, India adopted a strategy of Five Year Plans to bring about the rapid economic development. This process of planning still continuous. The basic objectives of our Five-Year Plans are "rapid expansion in agriculture, industry, transport and other

infrastructure with a view to increase production and employment to reduce poverty and inequality of incomes and wealth, and to establish a socialist society based on equality and justice.". In recent years, more emphasis is given to development of infrastructure such as energy, transport, banking and finance, science and technology, social over heats such as health, hygiene and education. New thrust areas for agriculture include high yielding Hybrid varieties, pulses and oilseeds, irrigation, water management, etc. During the last 50 years, India has made lot of progress in all the sectors of the economy. While entering into the third millennium, confidence of achieving more rapid progress in the near future has been created. On a coconut trail Recently, the technology mission on coconut has been launched to make coconut farming competitive and ensure reasonable returns. It underlines the need for concerted effort to improve productivity, and diversification of coconut and coconut-based products. India is the largest grower in world producing 12.3 billion nuts in an area of 1.8 million hectares with a productivity of 6,892 nuts per hectare. The crop contributes nearly Rs. 7,000 crore annually to the GDP and earns foreign exchange of Rs. 340 crore. It grows in 17 states and three Union territories of the country and ensures livelihood for 10 million people. The technology mission on coconut announced by the Prime Minister last year during his sojourn in kerala, have been finalised and approved by the Central government recently. The objectives of the mission delineated in the guidelines include: a) to establish convergence and synergy among ongoing governmental programmes in order to bring about horizontal and vertical integration, b) ensure appropriate and timely attention to production, post harvest and consumption chain, c)maximize economic benefits from the existing investment and infrastructure, d) promote diversification and value addition, e) disseminate technologies using participatory approach. The focus areas include R&D; capacity building; infrastructure development; integrated pest and disease

management; quality, quantity and productivity improvement, facilitating credit availability; ecologically sustainable schemes, post-harvest processing, product diversification and value-addition and agri-bussiness. The steering committee is headed by special secretary(agriculture & co-operation), ministry of agriculture, having horticulture secretary as the member secretary. The chairman of the Coconut Development Board will act as the mission director and the programme will be implemented by Coconut Development Board through identified agencies. Financial assistance will be available for development and adoption of technologies for management of insect pests and disease limited to Rs. 35 lakh will be given for NGOs and farmers.

Crop Insurance Indian agriculture is characterized by the vagaries of nature such a scarcity conditions, excessive rains, cyclones, hailstorms, floods etc. Many times, crops are totally lost and farmers are in great trouble. This happens of and on resulting in instability of income to the farmers. It becomes a gamble. To overcome this, the concept of crop insurance has come in Govt. of India started the crop insurance scheme in 1985 in collaboration with the General Insurance Corporation of India. This Scheme continued till 1999. This Schemes had some weaknesses and limitations. In view of the suggestions made by many, the old scheme was discontinued and a new `National Agricultural Insurance Scheme has been introduced from Rabi season of 1999. A few salient features of the schemes are:

a. b. c. d. e.

Any farmer irrespective of whether he has taken loan or not, can participate on this Scheme. The earlier limit of sum assured of Rs. 10,000/- is no more there. The courage of the scheme has been widened to include additional new crops. Tenant farmer can also participate in this scheme. These is concession to the extent of 50% in the premier to be paid by the small and marginal farmers.

Risk and uncertainty

Insurance against certain natural hazards mainly depends on kinds of events, which are classed as

i. ii. i.

Risks and Uncertainties. Risks: Pure risks involve complete knowledge of the future events. Since knowledge of the future is complete, the losses and gains, which grow out of risk, can be predicted with certainty and can be incorporated into the firms cost schedule. Therefore pure risk is a cost. Uncertainty: Uncertainty is a subjective prediction in contrast to pure risk, a probability of outcome cannot be estimated in an empirical or quantitative sense for uncertainty is always present when the knowledge of the future is less than perfect.

ii.

Risk can be incorporated into firms (farmers) cost structure and is therefore insurable; while uncertainty is not insurable and cannot be reduced to cost. An eventuality, which is an uncertainty from the individual point of view, can be classed as a risk, if large number of observations is available and outcome is predictable. Death, fire losses, hailstorms, famines and similar outcomes are absolutely uncertain for an individual. However, the probability of these outcomes is measurable when the number of cases or observations are sufficiently large and randomly or independently distributed Insurance Company can predict statistical probability of these events with the degree of certainty such that the phenomenon called as risk and hence can be insured. INSURANCE: Insurance is the means by which the risks are shared between many individuals or institutions who face them, so that the event of contingency befalling an individual is compensated for his loss out of the premiums paid by all the insured against it. Insurance is also the pooling of enough small predictable risks so that the annual losses for the group are predictable. What is burdensome for the individual becomes constant annual loss for the Insurance Company. Insurance involved the periodical payment of relatively small sum by the insured that is facing the large risk and that if the risk is realized, he will be compensated in exchange of amounts provided for in his insurance policy. The burden of risk is borne by a large group through their contributions in the form of premiums to provide for a fund from which compensation is paid. Insurance is a "group activity to prevent catastrophe for the individual ". Not only must the insurance be spread

over large number of persons, but also the object being insured must be independent category and cannot be manipulated by human efforts. Insurance does not abolish losses through association, it distributes these from individual to the group. Principles: Following principles are involved in the insurance

i. ii. iii. iv.

Principle of Principle of Transfer of Principle of

sharing loss pooling risks risk large numbers.

Nature of Insurance

i. ii. iii. iv. v. vi. vii.

Insurance Insurance Insurance Insurance Insurance Insurance Insurance

is a self help is no charity is no gambling does not eliminate risk is a cost. is productive is social service

Risk and uncertainties in agriculture: Risks :The risks in agriculture are those events which are natural and independent or of random occurrence. The events are broadly grouped as meteorological and biological.

i. ii. iii.

Meteorological Hailstorm, windstorm, drought (famine), floods, landslides, cyclones, snowfall, hotwave, coldwave, typhoon, hurricane, tornado, etc. Biological Occurrence of various pests and diseases and locusts invasion Others Natural fires, lightening and accidents. These risks are insurable.

UNCERTAINTY: Price fluctuations. Prices are not insurable. NATIONAL CROP INSURANCE SCHEME ( INDIA) RASHTRIYA KRISHI BIMA (RKYB) OBJECTIVES:

The objectives of the RKYB are as under:-

1. 2. 3.

To provide insurance coverage and financial support to the farmers in the event of failure of an of the notified crop as a result of natural calamities, pests and diseases. To encourage the farmers to adopt progressive farming practices, high value inputs and higher technology in Agriculture. To help stabilize farm incomes, particularly in disaster years.

SALIENT FEATURES OF THE SCHEME:

1.

CROPS COVERED: The Crops in the following broad groups in respect of which

i. ii.

the past yield data based on Crop Cutting Experiments (CCEs) is available for adequate number of years, and requisite number of CCEs are conducted for estimating the yield during the proposed season; a. Food crops (Cereals, Millets & Pulses) b. Oilseeds c. Sugarcane, Cotton & Potato (Annual Commercial/annual Horticultural crops)

Other annual Commercial / annual Horticultural crops subject to availability of past Yield data will be covered in a period of three years. However, the crops which will be covered next year will have to be spelt before the close of preceding year.

2.

STATES AND AREAS TO BE COVERED: The Scheme extends to all States and Union Territories. The States / Uts opting for the Scheme, would be required to take up all the crops identified for coverage in a given year. Exit clause: The States/ Union Territories once opting for the Scheme, will have to continue for a minimum period of three years.

3.

FARMERS TO BE COVERED:

All farmers including sharecroppers, tenant farmers growing the notified crops in the notified areas are eligible for coverage. The Scheme covers following groups of farmers:

a. b. 1.

On a compulsory basis; All farmers growing notified crops and availing Seasonal Agricultural Operations (SAO0 loans from Financial Institutions i.e. Loanee Farmers. On a voluntary basis: All other farmers growing notified crops i.e. Non Loanee farmers ) who opt for the Scheme. RISKS COVERED & EXCLUSIONS:

Comprehensive risk insurance will be provided to cover yield losses due to nonpreventable risks viz:

i. ii. iii. iv. v.

Natural Fire and Lightning. Storm, Hailstorm, Cyclone, Typhoon, Tempest, Hurricane, Tornado, etc. Flood, Inundation and Landslide Drought, Dry spells Pests/Diseases, etc.

Losses arising out of war and nuclear risks, malicious damage and other preventable risks shall be excluded.

1.

SUM INSURED/ LIMIT OF COVERAGE: The Sum Insured (SI) may extend to the value of the threshold yield of the insured crop at the option of the insured farmers. However, a farmer may also insure his crop beyond value of threshold yield level upto 150% of average yield of notified area on payment of premium at commercial rates. In case of Loanee farmers, the Sum Insured would be atleast equal to the amount of crop loan advanced. Further, in case of Loanee farmers, the Insurance Charges shall be an additionality to the Scale of Finance for the purpose of obtaining loan. In matters of Crop Loan disbursement procedures, guidelines of RBI/NABARD shall be binding.

2.

PREMIUM RATES: S. Season no 1 Kharif Crops Bajra & Oilseeds Othercrops (cereals, other millets & pulses) Premium rate 3.5% of SI or Acturial rate, whichever is less 2.5% of SI or Actuarial rate, whichever is less

2 Rabi

Wheat Other crops (other cereals, millets, pulses & oilseeds)

1.5% of SI or Actuarial rate, whichever is less 2.0% of SI or Actuarial rate, whichever is less Actuarial rates

3 Kharif and Annual commercial/annual Rabi Horticultural crops

Transition to the actuarial regime in case of cereals, millets, pulses & oilseeds would be made in a period of five years. The actuarial rates shall be applied at District/Region/State level at the option of the State Govt./UT.

3.

PREMIUM SUBSIDY: 50% subsidy in premium is allowed in respect of Small & Marginal farmers, to be shared equally by the Government of India and State/UT Govt. The premium subsidy will be phased out on sunset basis in a period of three to five years subject to review of financial results and the response of farmers at the end of the first year of the implementation of the Scheme. The defination of Small and Marginal farmer would be as follows: SMALL FARMER: A Cultivator with a land holding of 2 hectares (5 acres) or less, as defined in the land ceiling legislation of the concerned State/UT. MARGINAL FARMER: A Cultivator with a land holding of 1 hectare or less (2.5 acres).

4.

SHARING OF RISK: Risk will be shared by IA and the Government in the following proportions:

a.

b.

Food crops & Oilseeds; Till, complete transition to Actuarial regime in a period of five years takes place, claims beyond 100% of premium will be bone by the Government. Thereafter, all normal claims, i.e. claims upto 150% of premium will be met by IA and claims beyond 150% shall be paid out of Corpus Fund for a period of three years. After this period of three years claims upto 200% will be met by IA and above this ceiling out of the Corpus Fund. Annual Commercial crops/annual horticultural crops: Implementing Agency shall bear all normal losses. I.e. claims

upto 150% of premium in the first three years and 200% of premium thereafter subject to satisfactory claims experience. The claims beyond 150% of premium in the first three years of 200% of premium thereafter shall be paid out of Corpus Fund. However, the period of three years stipulated for this purpose will be reviewed on the basis of financial results after the first year of implementation and the period will be extended to five years if considered necessary. To meet Catastrophe losses, a Corpus Fund shall be created with contributions from the Government of India and State Govt./UT in 50:50 basis. A portion of Calamity Relief Fund (CRF) will be used for contribution to the Corpus Fund. 9. AREA APPROACH and UNIT OF INSURANCE: The Scheme would operate on the basis of `Area Approach i.e. Defined Areas for each notified crop for widespread calamities and on an individual basis for localized calamities such as hailstorm, landslide, cyclone and flood. The Defined Area (i.e. unit area of insurance) may be Gram Panchayat, Mandal, Hobli Circle, Phirka, Block, Taluka, etc. to be decided by the State /UT Govt. However, each participating State/UT Govt. will be required to reach the level of Gram Panchayat as the unit in a maximum period of three years. Individual based assessment in case of localized calamities, would be implemented in limited areas on experimental basis, initially and shall be extended in the light of operational experience gained. The District Revenue administration will assist implementing Agency in assessing the extent of loss.

10. a.

SEASONALITY DISCIPLINE: The broad seasonality discipline followed for Loanee farmers will be as under: Activity Loaning period Cut-off date for receipt of Declarations Cut-off receipt of yield data Kharif April to September November January/March Rabi October to next March May July/September

b.

The broad cut-off dates for receipt of proposals in respect of Non-loanee farmers will be as under: 1. Kharif season : 31st July 2. Rabi season: 31st December.

However, seasonality discipline may be modified, if and where necessary in consultation with State/UT and the Govt. of India.
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ESTIMATION OF CROP YIELD: The State/UT Govt. will plan and conduct the requisite number of Crop Cutting Experiments (CCEs) for all notified crops in the notified insurance units in order to assess the crop yield. The State /UT Govt. will maintain single series of Crop Cutting Experiments (CCEs) and resultant Yield estimates, both for Crop Production estimates and Crop Insurance. Crop Cutting Experiments (C.C.E) shall be undertaken per unit area / per crop, on a sliding scale, as indicated below: S. No UNIT AREA Minimum number of C.C.E.s required to be done 16 10

1 Taluka/ Tehsil/ Block 2 Mabdal/Phirka/ any other smaller unit area comprising 8-10 villages 3 Gram panchayat comprising 4-5 villages

08

A Technical Advisory Committee (T.A.C) comprising representatives from N.S.S.O Ministry of Agriculture (G.O.I) and IA shall be constituted to decide the sample size of CCEs and all other technical matters.
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LEVELS OF INDEMNITY & THRESHOLD YIELD: Three levels of Indemnity viz. 90%, 80% & 60% corresponding to Low Risk. Medium Risk & High Risk areas shall be available for all

crops (cereals, millets, pulses & oilseeds and annual commercial/ annual horticultural crops) based on Coefficient of Variation (C.V.) in yield of past 10 years data. However, the insured farmers of unit area may opt for higher level of indemnity on payment of additional premium based on actuarial rates. The Threshold yield (TY) on Guaranteed yield for a crop in an Insurance Unit shall be the moving average based on the past three years average yield in case of Rice & Wheat and five years average yield in case of Other crops, multiplied by the level of indemnity.
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NATURE OF COVERAGE AND INDEMNITY: If the Actual Yield (AY) per hectare of the insured crop for the defined area (on the basis of requisite number of Crop Cutting Experiments (CCEs) in the insured season, falls short of the specified `Threshold Yield ( TY), all the insured farmers growing that crop in the defined area are deemed to have suffered shortfall in their yield. The Scheme seeks to provide coverage against such contingency. Indemnity shall be calculated as per the following formula: Shortfall in Yield Threshold yield Sum insured for the farmer (Shortfall = Threshold Yield Actual Yield for the Defined Area) 13A . INDEMNITY IN CASE OF LOCALISED RISKS: Loss assessment and modified indemnity procedures in case of occurrence of localized perils, such as hailstorm, landslide, cyclone and flood where settlement of claims will be on individual basis, shall be formulated by IA in coordination with State/UT Govt. The loss assessment of localized risks on individual basis will be experimented in limited areas, initially and shall be extended in the light of operational experience gained. The District Revenue administration will assist IA in assessing the extent of loss.

PROCEDURE FOR APPROVAL & SETTLEMENT OF CLAIMS: Once the Yield Data is received from the State /UT Govt. as per the prescribed cut-off dates, claims will be worked out and settled by IA. The claim checks along with claim particulars will be released to the individual nodal banks. The Banks at the grass root level, in turn, shall credit the accounts of the individual farmers and display the particulars of beneficiaries on their notice board.

In the context of localized phenomenon viz. hailstorm, landslide, cyclone and flood, the IA shall evolve a procedure to estimate such losses at individual farmer level in consultation with DAC/ State/ UT Settlement of such claims will be on individual basis between IA and insured.

FINANCIAL SUPPORT TOWARDS ADMINISTRATION & OPERATING (A&O) EXPENSES: The A & O expenses would be shared equally by the Central Government & respective State Government on sunset basis (100% in 1st year, 80% in 2nd year, 60% in 3rd year, 40% in 4th year, 20% in 5th year and `zero thereafter.)

CORPUS FUND: To meet Catastrophic losses, a Corpus Fund shall be created with contributions from the Government of India and State / UT on 50:50 basis. A portion of Calamity Relief Fund (CRF) shall be used for contribution to the Corpus Fund. The Corpus Fund shall be managed by Implementing Agency (IA)

REINSURANCE COVER: Efforts will be made by IA to obtain appropriate reinsurance cover for the proposed RKBY in the international Reinsurance market.

MANAGEMENT OF THE SCHEME, MONITORING AND REVIEW: In respect of Loanee farmers, the Banks shall play the same role as under CCIS. In respect of non-Loanee farmers, Bank shall collect the premium alongwith the Declarations and send it to IA within the prescribed time limits. However, in areas where IA has requisite infrastructure, a non-loanee farmer will have option to send premium alongwith Declaration, directly to IA within the time limits. Selection will be implemented in accordance with the operational modalities as worked out by IA in consultation with Dept. of Agriculture and Co-operation. During each crop season, the agricultural situation will be closely monitored in the implementing States/ Union Territories. The State/UT Department of Agriculture and district administration shall

set up a District Level Monitoring Committee (DLMC), who will provide fortnightly reports of Agricultural situation with details of area sown, seasonal weather conditions, pest incidence, stage of crop failure (if any), etc. The operation of the Scheme will be reviewed annually, and modifications as may be required would be introduced. Periodic, Appraisal Reports on the Scheme would be prepared by Ministry of Agriculture, the Government of India/ Implementing Agency.
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IMPLEMENTING AGENCY (IA): An exclusive Organization would be set up in due course, for implementation for RKBY. Until such time as the new set up is created, the G.I.C. of India will continue to function as the Implementing Agency.

BENEFITS EXPECTED FROM SCHEME: The Scheme is expected to

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Be a critical instrument of development in the field of crop production, providing financial support to the farmers in the event of crop failure. Encourage farmers to adopt progressive farming practices and higher technology in Agriculture. Help in maintaining flow of agricultural credit. Provide significant benefits not merely to the insured farmers, but, to the entire community directly and indirectly through spillover and multiplier effects in terms of maintaining production & employment, generation of market fees, taxes, etc. and net assertion to economic growth. Streamline loss assessment procedures and help in building up huge and accurate statistical base for crop production.

Commercial Farming Features More Marketable Surplus: In recent years, farming in India has become market oriented. Farmer has to consider not only demand and supply of different commodities but also the costs involved and the profitability. India is characterized by Small-Scale family farming. Naturally, the marketable surplus with individual farmer is also relatively smaller. Now with commercialization coming in larger quantities of the commodities are being produced with new techniques of production. Thus, many areas, many pockets are developed for production of lot of marketable surplus of

different commodities. In Maharashtra, one can find such areas for Grapes, Oranges, Banana, Pomegranate, Ber, number of vegetables, etc. To overcome the problem of small-scale farming (& small surplus), not only the yield boosting techniques are used but farmers have formed their groups. Associations or Co-operatives for supply of certain inputs to members, transport, marketing the produce at distant markets. Some of them for instance, ` Maha-grapes, Maha-mango are arranging for exports of grapes and mangoes respectively.

Improved/High Yield varieties Another important feature of the commercial farming is the use of improved/hybrid/high yielding varieties of crops. Our Green Revolution was started with the high yielding varieties of wheat. It further spread to other crops like rice, maize, sorghum, fruit and vegetable crops. Area under high yielding varieties has increased by leaps and bounds. The farmers have become more responsive to the use of HYVs are compared to the past. Now, there has been tremendous increase in the research relating to breeding of new varieties of different crops in Agriculture Universities, Control Institutes as well as the private agencies. As a result, there has been a greater influx of new HYVs in markets and farmers are also adopting the same. The genetic engineering and other breeding techniques have made much headway in recent years and several new varieties of crops having all the good characteristics will be available soon.

High Productivity The basic criterion in breeding new varieties of crops, is increase in the productivity as compared to the existing varieties as also to bring in other good characteristics such as drought resistance, disease and pest resistance, market preference, taste, etc. In commercial farming, profit is the prime consideration. Moreover, in the age of competition, the survival depends on the higher production with lower cost. Farmer has always to keep in mind this and make adjustments in management accordingly.

Quality Produce In commercial farming the demand envisages the quality also. Tastes of people (consumers) vary from area to area. Apart from taste, size, color, contents, weight, free from pests and diseases are also to be considered. These aspects of quality are to be observed critically particularly when one is producing for export different countries have laid down their standards of quality which are to be adhered to when exporting produce to that country. In order to get the produce of a particular quality, proper care has to be taken right from the cultivation practices upto harvesting and even during the pest harvest period till the produce reaches the destination.

Grading Produce In the past, our farmers did not grade their produce. Many a times, it was not paying also.. However, in recent years, with rapid urbanization, consumers prefer the produce of an uniform and good quality. So, farmers are compelled to grade their produce. They have experienced that grading brings in more money as compared to ungraded produce. By grading the produce, one can send the produce to different markets. Lower quality produce can be sold in the small, local market. As indicated earlier, it is very important aspect in export. One has to strictly observe the grades and standards fixed by a particular country.

Good Packaging In the past, packaging was not considered to be an important item in marketing of Produce. As a result, lot of produce used to be wasted. However, in recent years, there has been a vast change in this respect. Even in the internal market, we find the produce packed in proper packages Nylon nets, polythene bags, Card board boxes, plastic boxes have become common for packaging of fruits and some vegetables, Urban consumers are attracted towards better packaged produces and they are ready to pay for it.

More care is required to be taken in packaging of produce meant for export. By experience, because of demonstration effect and the requirements of consumers in different countries, exporters have now started using attractive and proper package material.

Quick Transport For perishable commodities which are to be sent to distant markets, quick transport is inevitable. These commodities must reach the consumers in a specified time and in good condition depending on the value, the price differential and the destination, different modes of transport are used. Rail and road transport is normally used for internal markets. However, for export markets, commodities like fruits and flowers are sent by air to some markets. Of course, airfreight at present is quite high and it is used for such commodities and such designations where price advantage is substantial.

Refrigerated Transport It is another requirement of high-tech agriculture and is being used for few commodities exported from the country. This is relatively cheaper as compared to air transport. In Maharashtra, grape growers through their organizations have established `pre-cooling plants. The produce, after harvest, is kept in these plants at a particular Temperature and for a particular period. Then it is loaded in the refrigerated container mounted on a truck, having cooling arrangement during transport to the port. The Container at the port is then loaded in the Steamer which has also cooling arrangement. Thus, the produce goes to longer destinations in good condition.