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M.Karthikeyan , Program Leader 11-13th April 2012 University of Twente

Micro Crop Insurance for Enhancing the Livelihoods of Small Farmers- Pilots by DHAN Foundation. M.Karthikeyan , Program Leader 11-13th April 2012 University of Twente. Content of my presentation. About DHAN Foundation Context of DHAN’s action research on micro crop insurance

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M.Karthikeyan , Program Leader 11-13th April 2012 University of Twente

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  1. MicroCrop Insurance for Enhancing the Livelihoods of Small Farmers- Pilots by DHAN Foundation M.Karthikeyan, Program Leader 11-13th April 2012 University of Twente

  2. Content of my presentation About DHAN Foundation Context of DHAN’s action research on micro crop insurance Crop insurance initiatives Action research on product design and delivery Challenges in need of further research

  3. About DHAN Foundation • DHAN is a grassroots development organisation working with 0.9 million poor families across 12 states in India • Currently working with around 287000 farming families as part of Tank-fed Agriculture and Rainfed Farming programs • Has been taking up insurance related interventions since 1997

  4. Risk context of tank-fed and rainfed farming families Controllable risks ?!!! • Pests • Diseases • Weeds Uncontrollable risks • Rainfall – Deficit (major), Excess, Mismatch in distribution Climate change

  5. Risk context of tank-fed and rainfed farming families… • Deficit rainfall, a production risk, is a major risk affecting more than 60 to 80 % of the yield • 25% of annual income drop is noticed • Directly affect in rainfed agriculture • Indirectly affect by inadequate filling of rainfed tanks in tank-fed agriculture • It is recurrent

  6. Market context • Insurance companies were not able to meet the location specific needs through customized policies on a micro scale • An exclusive issue like un-controllable pest problem • Difference in crop practices across the locations and so the risk • Affordable and functional farm unit size

  7. Agriculture insurance demand context • Lack of knowledge on insurance • Farmers not ready to pay actuarial based premiums- Classic problem in pricing risk: People forget bad events • Lack of customised products • Lack of free access to institutions offering insurance • Lack of effective insurance delivery mechanism

  8. DHAN intervention context • As part of a comprehensive intervention program involving natural resource management (land development, tank rehabilitation), crop production support like supply of quality seeds, microfinance for agriculture & livestock development • With farmers’ organisations as platform

  9. Organisational context Uzhavar groups (UK) Instit utions 15-20 members Men/women farmers Adjacent land holders Microfinance as supporting tool 10 – 20 UK in 2 – 3 villages Institutions150 to 200 UK in 10 to 15 villages Rainfed Farmers Association Research Institutions, Banks, Agriculture department Rainfed Farmers Federation

  10. Crop insurance initiatives Products piloted • Deficit Rainfall Insurance • Dryspell insurance • Mutual Deficit Rainfall Insurance • Mutual Pest Insurance • Mutual Crop Income Insurance

  11. Enrollment so far

  12. Action research on product design

  13. Action research on product design…

  14. Action research on product design…

  15. Action research on product design…

  16. Action research on product design…

  17. Action research on product delivery mechanism

  18. Mutual crop insurance • Mutual crop insurance is a ‘process based’ insurance mechanism, built on time tested mutuality practice in the farming community • It is owned by the insured farming community, and designed and managed by the wiser farmers from the insured farming community

  19. Why DHAN went for Mutual Crop Insurance?... • To meet the location specific needs • Housing design, implementation and decision making with the local community • There by increasing their ownership and awareness • Thereby attempting to link risk transfer and risk education and prevention

  20. Inspiration and Support for this initiative • Experience of mutual crop insurance in Netherlands • The training and technical support given by Mutual Insurance Association of Netherlands (MIAN) and financial support and back up guarantee support given by Achmea Re

  21. Community organisation (CO) for livelihood enhancement and risk management- RFDP Uzhavar groups (UK) Banks Instit utions 15-20 members Men/women farmers Adjacent land holders Microfinance as supporting tool 10 – 20 UK in 2 – 3 villages Institutions150 to 200 UK in 10 to 15 villages Rainfed Farmers Association Research Institutions, Banks, Agriculture department Rainfed Farmers Federation MutualInsurance Committee

  22. Modalities of mutual crop insurance • A Mutual insurance committee (MIC) has 15 to 30 members • The generic roles of this committee is • Policy making and reviewing the policy • Implementation of the insurance product along with staff • The specific roles will vary depending on the product

  23. Challenges in need of further research • Insurance education – what works and what does not • How crop insurance can become demand driven? • Combining risk transfer with risk education and reduction practices in agriculture

  24. Challenges in need of further research… • Conducive policy for crop insurance product development and delivery • Modalities of investing on • Customised product development for an area/crop • Infrastructure and data (raingauges) • Modalities for reinsurance • Addressing affordability issue

  25. THANK YOU!

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