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Weather insurance for coffee growers announced

Other Topics: Special Blend Coffee, Coffee Franchise, Gourmet Coffee Roaster Cups

The Coffee Board
March 24, 2007

Bangalore, Karnataka, India -- The Coffee Board, a statutory body of the Union Commerce Ministry, Saturday announced a comprehensive weather insurance scheme for growers at affordable premium against crop loss due to the vagaries of monsoons.

The Coffee Board, a statutory body of the Union Commerce Ministry, Saturday announced a comprehensive weather insurance scheme for growers at affordable premium against crop loss due to the vagaries of monsoons.

The rainfall-linked insurance scheme, to be offered by the state-owned Agriculture Insurance Company (AIC), has been devised to protect coffee growers from deviations in weather (rainfall) resulting in lower yield within a specific area and period.

It provides payout against deficit rainfall in blossom showers, backing showers and excess rainfall during the monsoons.

The coffee rainfall insurance policy will be marketed by AIC from Monday (March 26) till September this year for the monsoon rains that occur between July 1 and Aug 31.

As the introduction of the scheme has been delayed at the central government level, the policy will not be applicable to blossom showers occurring between March 1 and April 15 for Robusta and from March 1 to April 30 for Arabica and so also for the backing showers that take place 18 days after blossom showers begin and 35 days later.

'The policy will be implemented fully from next year and growers will have the option to choose any one or two or all three options for which the premium is worked out separately for each option,' Union Minister of State for Commerce Jairam Ramesh told reporters here while announcing the insurance scheme.

To make the scheme attractive, the Coffee Board will provide a 50 percent subsidy on the premium amount up to a ceiling of Rs.2,000 for Robusta and Rs.2,500 for Arabica per hectare. The subsidy will be applicable only to small growers with a holding of 10 hectares.

'The finance ministry has made a provision of Rs.221 million per annum towards the subsidy component. It will offer insurance cover to 50 percent of the area under small-holding - 116,000 hectares under coffee. The board will reimburse its subsidy component to AIC directly, while the grower taking insurance will pay the premium net off subsidy,' Ramesh pointed out.

The maximum sum assured under the insurance is Rs.20,000 per hectare for Robusta and Rs.30,000 per hectare for Arabica. The phase-wise sum assured in case of Robusta is Rs.10,000 for blossom showers, Rs.4,000 for backing showers and Rs.6,000 for monsoon showers. In case of Arabica, it will be Rs.16,000 for blossom showers, Rs.6,000 for backing showers and Rs.8,000 for monsoon showers.

'Since weather plays a crucial role in determining the yield level, planters have to manage weather risk to maintain their income steam. Receipt of timely blossom and backing showers followed by monsoons ensures sustained coffee production.

Blossom and backing showers occur during summer months and are often unpredictable. Absence of required rainfall can cause a crop loss of up to 50 percent,' Coffee Board chairman Krishna Rao said.

According to AIC officials, the insurance payout will be made if the rainfall is below 25mm during the period and full payout if the rainfall is below 5mm in the case of blossom showers. Similarly, for backing showers the payout will commence if the rainfall is below 12mm during the period and full payout if the rainfall is below 5mm.

In the case of monsoon showers, the payout will take place if the daily rainfall is more than 25mm consecutively for seven days during the period.

'The rainfall insurance is available for Robusta and Arabica in all the coffee zones in Karnataka (23 zones), Kerala (11 zones) and Tamil Nadu (9 zones). The premiums charged vary across the type of coffee (Arabica or Robusta) and across different zones on account of differences in rainfall patterns, distribution and the risks,' a company official said.
 

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