 "Public, private agencies to avail automatic weather station services")
Accurate weather data many not be the only domain of Indian Meteorological Department ( IMD) as is the case now. Soon the public authorities and private agencies like insurers may be able to fetch data from private vendors managing and installing "automatic weather stations".
The ministry of agriculture has come out with the guidelines for setting up of automatic weather stations along with accreditation and certification norms for private vendors to manage, install weather stations and certify quality of data.
These guidelines are crucial and much awaited both by the government and private parties involved in national agricultural insurance scheme which is a national programme for ensuring farmer security in enhancing crop productivity or weather-based insurance products .
Additionally, these weather stations could also provide data for private insurers offering weather-based crop insurance.
An automatic weather station is a meteorological station where observations are made and ttransmitted automatically. It forms part of a network of meteoroligcal stations each transmitting its processed data to a central unit.
Officials explained that the criteria for certification and accredition of third party vendors will help them in deciding weather station location, sensor specifications to ensure the quality of weather data as it is important for insurance claim settlement. Weather-based crop insurance scheme (WBCIS) is currently a pilot scheme since kharif 2007 where 20-80% of the total premium is subsidised. Over 20% of the country is currently covered under WBCIS.
Weather insurance has a strong correlation between yield and weather and is currently the insuarnce scheme is only for those crops where the correlation is strong like wheat, rice etc. Explaining this officials said that WBCIS uses weather parameteres as proxy for crop yields in compensating cultivators for deemed crop losses.
However lack of adequate weather stations lead to less qualified data required to calculate the risk and premium. Ideally crops within a radius of 5 km from a weather station could be insured with reasonbale reduction in basis risks and anything beyond 5 km risks tend to increase the uncertainity in terms of increased basis risk.
It is estimated that within a radius of 5 km, about 40,000 weather stations would be required at the national level to service weatherinsuarnce”, said an official.
“ One of the serious challenge is basis risk which is difference between weather expereince at the location of the weather station and the farm whichs is referred to the weather station under the scheme. Farms closer to the location to the weather station tend to expereince almost similar weather and therefore the basis risk is lowe", they added.
Given the enormity of the task , private weather data providers have entered the market to supply data to the insurance companies at fees. However there are no guidelines yet to qualify the data for use.
Under the modified weather scheme of the government, the new policy would provide insurance cover to be sold by insurance companies, where 90% would be upfront subsidy premium paid by the government and 10% premium by farmers, said official sources.
Thus an area of concern is the subsidy payment mechanism where the criteria to be reworked are mode of transfer, nature of recipients, calculation methodology of subsidy, nature of beneficiary regions, type of crops to be insured and nature of risk. The government is also looking at variants of insurance covers to be included under the agriculture insurance schemes.
One is the weather index-based crop insurance, which is currently undergoing pilot studies. The second product is a combination of weather-based index and crop yield-based index. Existing products are either yield-based assessment of risk or weather-based risk. The combination product is based on the total sum insured for a crop insured by the farmer to be divided in two categories — influence of yield and weather on crop.
Other components that may be designed into the modified insurance scheme is to add savings-linked crop insurance since cultivators are less enthusiastic to buy insurance products if there are no payouts in the previous season.
Therefore, some amount of the premium paid will be invested on behalf of the farmer to earn reasonable investment return and the farmer can take the money after full year of remaining invested in the scheme or certain%age in between,said officials.
The ministry of agriculture has come out with the guidelines for setting up of automatic weather stations along with accreditation and certification norms for private vendors to manage, install weather stations and certify quality of data.
These guidelines are crucial and much awaited both by the government and private parties involved in national agricultural insurance scheme which is a national programme for ensuring farmer security in enhancing crop productivity or weather-based insurance products .
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The government proposes to roll out an integrated farmer security plan by reworking insurance schemes and consolidating all other risk management schemes to benefit farmers at large. It will be known as modified crop insurance scheme.
Additionally, these weather stations could also provide data for private insurers offering weather-based crop insurance.
An automatic weather station is a meteorological station where observations are made and ttransmitted automatically. It forms part of a network of meteoroligcal stations each transmitting its processed data to a central unit.
Officials explained that the criteria for certification and accredition of third party vendors will help them in deciding weather station location, sensor specifications to ensure the quality of weather data as it is important for insurance claim settlement. Weather-based crop insurance scheme (WBCIS) is currently a pilot scheme since kharif 2007 where 20-80% of the total premium is subsidised. Over 20% of the country is currently covered under WBCIS.
Weather insurance has a strong correlation between yield and weather and is currently the insuarnce scheme is only for those crops where the correlation is strong like wheat, rice etc. Explaining this officials said that WBCIS uses weather parameteres as proxy for crop yields in compensating cultivators for deemed crop losses.
However lack of adequate weather stations lead to less qualified data required to calculate the risk and premium. Ideally crops within a radius of 5 km from a weather station could be insured with reasonbale reduction in basis risks and anything beyond 5 km risks tend to increase the uncertainity in terms of increased basis risk.
It is estimated that within a radius of 5 km, about 40,000 weather stations would be required at the national level to service weatherinsuarnce”, said an official.
“ One of the serious challenge is basis risk which is difference between weather expereince at the location of the weather station and the farm whichs is referred to the weather station under the scheme. Farms closer to the location to the weather station tend to expereince almost similar weather and therefore the basis risk is lowe", they added.
Given the enormity of the task , private weather data providers have entered the market to supply data to the insurance companies at fees. However there are no guidelines yet to qualify the data for use.
Under the modified weather scheme of the government, the new policy would provide insurance cover to be sold by insurance companies, where 90% would be upfront subsidy premium paid by the government and 10% premium by farmers, said official sources.
Thus an area of concern is the subsidy payment mechanism where the criteria to be reworked are mode of transfer, nature of recipients, calculation methodology of subsidy, nature of beneficiary regions, type of crops to be insured and nature of risk. The government is also looking at variants of insurance covers to be included under the agriculture insurance schemes.
One is the weather index-based crop insurance, which is currently undergoing pilot studies. The second product is a combination of weather-based index and crop yield-based index. Existing products are either yield-based assessment of risk or weather-based risk. The combination product is based on the total sum insured for a crop insured by the farmer to be divided in two categories — influence of yield and weather on crop.
Other components that may be designed into the modified insurance scheme is to add savings-linked crop insurance since cultivators are less enthusiastic to buy insurance products if there are no payouts in the previous season.
Therefore, some amount of the premium paid will be invested on behalf of the farmer to earn reasonable investment return and the farmer can take the money after full year of remaining invested in the scheme or certain%age in between,said officials.