ALTERNATIVES TO CROP INSURANCE
Implemented by NGO
A noteworthy obstruction to the commercialization of the small farmer is the enhanced unpredictability of the market place, evaluated with subsistence cultivating. The issue is exacerbated by the fact that it has not as much of ability to absorb the peril of loss. Purchasing insurance policy does not appear to be a workable approach, as the rates to cover these risks appear to be too high. Thus, government, policy-makers, and insurance companies are engaged in finding a blend of subsidies (for reducing premium) and distinctive sorts of insurance products to resolve the issue. An alternative is possible, one that can be implemented by NGOs who will have a low transaction cost of providing
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In the alternative being proposed here, the farmer is called upon to make a payment only after it has been verified that the crop is good and the farmer has the ability to pay. Perhaps an even bigger advantage is the 'credibility' of the proposed arrangement.
As it involves quite a large amount of money and makes it possible for NGOs to enter into the business, insurance providers who have knowledge about individual insurance buyers (avoiding adverse selection) as well as being in a position to monitor them (preventing moral hazard). NGOs providing micro- finance have worked out innovative methods of doing both of these. In principle, therefore, the NGOs have a lower transaction cost of providing insurance cover to small farmers. However, the requirement of the paid-up capital makes it very difficult for the NGOs to become insurance
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The recent years have seen a change in this trend with the emergence and rising popularity of weather-based insurance products. Weather insurance pays indemnities based not on the actual losses experienced by the insured, rather on the realization of a weather index that is highly correlated with actual losses. The index measures a specific weather variable (e g, rainfall, temperature, relative humidity, wind speed, etc) rather than the extent of loss (in crop yield). In other words, the product proxies the loss that farmers face owing to the adverse weather incidence.
The weather insurance product is designed after a critical study of the weather parameters affecting crop growth in its three critical phases - sowing, growth and flowering, and yield formation to harvest. During each period, the "trigger" (level below which weather parameter must fall for a farmer to begin receiving the payouts) and "exit" levels (level below which the weather parameter must drop for a farmer to receive the maximum payout) are defined. No additional indemnity is paid for realized values of the index that exceeds the exit
The Midwestern United States has experienced flooding for a long time now, but recently the annual precipitation has been far greater than before. Precipitation has increased 37 percent since 1958 (Jeff Spross). However a few major floods have been recorded dating back to 1913. In 1913 torrential rainfall hit Indiana and Ohio. The ground was greatly damaged from the flood causing difficult agricultural years for many years after the flood. Another flood hit a large portion of the Midwest region including the eastern Dakotas, Wisconsin, Kansas, and Indiana in 1993. Recovery costs for the Great Flood exceeded $4.2 billion. Like the flood in 1913 agriculture was affected for many years hurting the economy of the Midwest. A more recent disastrous flood hit mainly Iowa in 2008. After the flood in 2008 agriculture again took a hard hit and since the government ...
Since the beginning of the 19th century, America has had to deal with the on going
In Jonathan Swift’s satire, “A Modest Proposal”, Swift writes about the starving people of Ireland in the early 1700’s. He makes a wild and absurd proposal to help remedy the problems of overpopulation and poverty. Swift wants to make a political statement by using the “children” as satire to grasp the attention of the audience - the English people, the Irish politicians and the rich – and make them aware of the political, moral, and social problems. In “A Modest Proposal”, Swift’s arguments are presented effectively by using pathos (emotional appeal), ethos (ethics and values), and logos (logic reasoning and facts).
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In the 1980s, many farmers in the Midwest were running out of business rapidly and found that they could not stay in the agriculture indust...
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Already scientists have observed that more than 75% of the recent economic losses are caused by natural hazards which can be attributed to wind storms, floods, droughts and other climate related hazards. In the year 2008, the U.S. state of Iowa was on the front pages of newspapers all around the world. Weeks of heavy rain in the Midwest caused rivers to swell and levees to break. Millions of acres of farmland are now underwater, their plantings most likely destroyed. By March, Iowa had tied its third-highest monthly snowfall in 121 years of record keeping, and then came the rain. April’s st...
The weather in this novel controls their crops and the river flow; which controls their food and water supply. They depend on adequate rainfall to help their crops to grow and for the river to be full. They also depend on the sun to warm things up and make the crops grow. However, if there is too much rain or too much sun it can cause many problems, such as a drought or a flood. These things are significant in this novel, because t...
Taking place in South America, every character in the novel is somehow exposed to Latin culture. Colonized by the Spanish and the Portuguese Empire, South America was characterized by a hierarchal structure. Because the colonizers landed in a territory occupied by Natives, a clear line was drawn to distinguish the ones with power and the ones who were repressed. There was also a time of slavery in which many Africans were sent to South America to be used for labour. The Natives and the Africans were enslaved, abused, raped and were treated as inferior by the European colonizers.
Agriculture is a tough field to enter. Farming is no ordinary profession, nor is it cheap. With farming, comes many risks - some even life threatening. As with any other profession, equipment is needed to perform the job effectively. In this field, the equipment is very costly. The prices of the equipment, chemicals, and seed are increasing whereas the prices of the crop are steady decreasing. How are farmers supposed to make a substantial income when the prices are overwhelming? Can the government not allow a set income for farmers each year, in addition to their profit?
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