An Analysis of Farmers’ Perception and Awareness towards Crop Insurance as a Tool for Risk Management in Tamil Nadu

To insulate farmers against risks in agriculture, government has launched several schemes such as National Agricultural Insurance Scheme and weather index based crop insurance schemes. But their coverage seems to be limited among the farmers primarily due to lack of full information. This paper has reported the results of a survey of 600 farmers conducted to assess their perception about various facets of crop insurance schemes. The Probit and Tobit models have been employed to analyse the factors affecting awareness among the farmers. Crop diversification index has also been used to examine the farmers’ adjustment mechanism against risks. The survey has revealed that most farmers (65%) are aware of risk mitigation measures of the government. But, only half of the farmers have been found aware about the crop insurance schemes/products. This implies that there is need to disseminate information about insurance schemes across the target groups. Further, it has been shown that factors such as gross cropped area, income from other than agricultural sources, presence of risk in farming, number of workers in the farm family, satisfaction with the premium rate and affordability of the insurance premium amount significantly and positively influence the adoption of insurance and premium paid by the farmers. The study has clearly brought out the urgency of developing more innovative products, having minimum human interventions.