Crop insurance protects farmers from financial losses due to crop failures. It can cover losses from natural disasters, pests, diseases, and other unforeseen events.
How does crop insurance work?
- Farmers purchase crop insurance policies to protect against crop failures.
- The insurance provider compensates farmers for losses that affect their crops.
- Governments subsidize crop insurance to help farmers recover financially and continue farming.
Types of crop insurance
- Crop-yield insurance: Protects against losses due to natural disasters like hail, drought, and floods
- Crop-revenue insurance: Protects against losses due to declines in agricultural commodity prices
- Multiple peril crop insurance (MPCI): Covers crop losses caused by natural events
Crop insurance schemes in India
- National Agricultural Insurance Scheme (NAIS): A scheme offered by the Government of India
- Pradhan Mantri Fasal Bima Yojana (PMFBY): A scheme that supports sustainable agriculture
Who can buy crop insurance?
Crop insurance is purchased by agricultural producers, including farmers, ranchers and others to protect against either the loss of their crops due to natural disasters, or the loss of revenue due to declines in the prices of agricultural commodities. There are two major types of crop insurance: multiple peril crop insurance (MPCI) and crop-hail insurance.
More than 90 percent of farmers who buy crop insurance opt for MPCI. Both the cost of insurance and the amount an insurer will pay for losses are tied to the value of the specific crop. MPCI is available for more than 120 different crops, though not all crops are covered in every geographic area.
MPCI policies must be purchased each growing season by deadlines established by the federal government—and before a crop is planted. If damage occurs early enough in the growing season, the policy may include incentives to replant—or penalties for not doing do.
Multiple peril crop insurance (MPCI) covers crop losses, including lower yields, caused by natural events, such as: Destructive weather (hail, frost, damaging wind), Disease, Drought, Fire, Flooding, and Insect damage. MPCI is federally supported and regulated, and is sold and serviced by private-sector crop insurance companies and agents.