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Crop Insurance and Rice Productivity
The factors affecting the demand for crop insurance are analysed and its impact on the yields of smallholder rice producers in eastern India is assessed. Using data from a large farm-level survey from eastern India, a positive and significant impact of crop insurance on rice yields is observed. The robustness of the findings are tested after controlling for other covariates and endogeneity, using propensity-score matching and endogenous switching regression models.
The authors thank the Indian Council of Agricultural Research for funding support to undertake this research under the ICAR–IFPRI Work Plan. They are grateful to all enumerators and other staff members who were involved in data collection, monitoring, and designing of the questionnaire. The views expressed here are those of the authors and do not necessarily reflect those of the donor or the authors’ institutions. The usual disclaimers apply.
Farming is a risky venture and its outcomes are subject to variations in weather and market forces. Climate change is causing increasingly large weather variations and is likely to have heterogeneous impacts across geographical regions (Lobell et al 2008; Dell et al 2008). Countries in South Asia and Southern Africa are likely to suffer more from climate change and these changes are likely to have an impact on both the production and yield of major crops such as rice and maize. The risk and uncertainty in production and crop yield are likely to impact not only the food security of the nation (Wheeler and von Braun 2013) but also expected to have a direct impact on income and poverty among rural populations in general and farming households in particular (Barnwal and Kotani 2013).
Given this background, it is vital to understand the instability in production, crop yields, and adaptation strategies as well as their effectiveness on food security. Ray et al (2015) found that India is among the countries with the highest coefficient of maize and rice yields. In 31% of the maize-growing areas of India, the yields have stagnated; similarly, it has stagnated in 36% of the rice-growing areas and 70% of the wheat-growing areas too. This combination of slowing or stagnant growth and instability in yield could have a significant impact on the vulnerability and viability of small and marginal farmers in India. India is a vast country whose 29 states experience a wide variety of climatic and soil typology. The instability in foodgrain production is heterogeneous across the states, with greater instability in eastern India’s agricultural sector (Chand and Raju 2008).
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