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Insuring Indian farmers more effectively

© © AP Photo/Deepak Sharma

Crop insurance payouts could be sped up with the help of drone technology, preventing financial hardship and potentially helping more small-scale farmers get insured.

Thousands of farmers are killing themselves in India every year. They make this ultimate sacrifice not just because the weather gods have been brutal. It is also because they have been failed by crop insurance, their primary protection from climatic flippancy.

Less than 23% of India’s millions farmers are covered by crop insurance, and even those who are insured regularly suffer financial hardship from delayed payouts. These payments are often deferred by the slow damage assessment process as land record office personnel travel from village to village to conduct inspections. This means that it takes insurers a long time to receive timely, accurate data.

Indian farmers need to get their insurance payments faster. Therefore, India's central government has launched a technology-focused crop insurance pilot project called “Kisan” to address the problem. It is part of Indian central government’s new crop damage insurance scheme that is called “Pradhan Mantri Fasal Bima Yojna”, which translates as “Prime-Minister's crop insurance scheme”.

Crop insurance system

The Kisan pilot programme combines agricultural data collected by unmanned aerial vehicles (UAVs) – also known as drones – with high-definition satellite imagery, as well as crowd sourced data collected from farmers’ smartphones. These data sources can then be used with more traditional estimation methods, potentially helping officials speed up crop damage assessments and more accurately estimate yield.

While Kisan’s use of UAVs is still experimental, the data the devices collect can be used by government agricultural analysts, farmers, and insurance companies to improve the crop insurance system in a number of ways. Aerial imagery can be used to quickly classify surveyed areas into cultivated and non-cultivated land, and to assess how much damage has been caused by natural disasters. Expert analysts can also use UAV-gathered topography and elevation data to monitor soil erosion and to more accurately design water drainage and irrigation systems.

Agricultural analysts could use Normalized Difference Vegetation Index (NDVI) data collected by UAVs to conduct faster and more accurate crop health surveys – allowing insurers to process claims faster. They can use the same data to construct statistical models for risk management, based on historical yield, pest, and weather data. Drone data might also be useful for the early detection and prediction of pest infestations, data that insurance companies could share with farmers. Finally, drone data can be used to detect insurance fraud, preventing fraudsters from insuring the same piece of land multiple times, or claiming damage where there is none.

A ban on drones

UAVs won't operate alone. In the future, agricultural insurers will likely rely on different combinations of satellite and UAV data, which can be combined with traditional analysis methods to create a truly comprehensive view of India's farmland. By using these new data-collection methods, insurers would be able to deliver a better, cheaper product. And this would make it possible for more farmers to get insured.

Although UAV technology shows considerable promise for agricultural insurers in India, there are plenty of regulatory and logistical challenges to overcome. Since October 2014, civilians have been banned from using drones in India – a restriction that will likely last until the Indian Directorate General of Civil Aviation (DGCA) comes up with a regulatory system for commercial drones.

While the civilian UAV ban is still in place, some government organisations are beginning to acquire the devices. In January 2016, the Agriculture Ministry announced that it would allow the Mahalanobis National Crop Forecast Centre (MNCFC) to purchase UAVs for assessing crop damage. Eventually, the Agriculture Ministry anticipates buying UAVs for each Indian state to support the crop insurance programme.

India's massive agricultural sector presents another obstacle to the widespread adoption of UAV imagery in crop insurance. While UAVs will help make data collection faster and cheaper, innovative business models will be required to make crop insurance work on such a massive scale.

Therefore, introducing UAV imagery into Indian crop insurance won't always be easy. If the Kisan programme is successful, more Indian farmers will be able to enjoy the peace of mind that good crop insurance brings. And they will have far less to fear from bad weather.

Related links

Guidelines of the crop damage insurance scheme.

Article in The Times of India (5 October 2015) on Kisan project.

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