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Rainfall Insurance Scheme – Coffee (RISC)
Frequently Asked Questions (FAQs)
Q 1: What is Insurance?
Insurance is a technique where losses suffered by few are met from the funds accumulated through small contributions made by many who are exposed to similar risks.
Q2: What is Crop Insurance?
Crop insurance is a means of protecting the cultivators against financial losses due to uncertainties of crop yields arising out of practically all natural factors beyond their control.
Q3: What is Weather Insurance?
Weather insurance is a mechanism, which protects the cultivator against anticipated shortfall in crop yield arising out of adverse weather incidence within a specific location and period.
Q4: How is Weather Insurance different from crop insurance?
While Crop Insurance specifically indemnifies the cultivator against shortfall in crop yield, Weather based Crop Insurance is based on the fact that weather conditions affect crop production even when a cultivator has taken all the care to ensure good harvest. Historical correlation studies of crop yield with weather parameters help us in developing weather thresholds (triggers) beyond which crop starts getting affected adversely. Payout structures are developed to compensate cultivators to the extent of losses deemed to have been suffered by them using the weather triggers. In other words, Weather based Crop Insurance uses weather parameters as ‘proxy’ for crop yields in compensating the cultivators for deemed crop losses.
Q5: Where has Weather Insurance been tried before?
Weather Insurance has been piloted in the country since Kharif 2003 season for field crops. Some of the States where it’s piloted are Andhra Pradesh, Chattisgarh, Gujarat, Haryana, Karnataka, Madhya Pradesh, Maharashtra, Punjab, Rajasthan etc. The Government introduced a pilot on Weather Based Crop Insurance Scheme (WBCIS) in a few States during 2007-08.
Q6: What has been the experience for farmers? What have been the limitations?
Weather Insurance is a new concept. High level of transparency was / is maintained through out. After every period of insurance some improvements were made based on feedback received and also on internal research and experience. Limitations are many like - distance of the farm from the weather station, non-coverage of perils other than weather, differences in sowing / planting periods of the crop, differences in soil types etc. leading to weak correlation between the yield and the weather parameters, etc.
Q.7 What is Rainfall Insurance Scheme – Coffee (RISC)?
Coffee Rainfall insurance is a unique rainfall insurance product designed in consultation with Coffee Board, Central Coffee Research Institute and Coffee growers to protect the grower against anticipated shortfall in yield due to adverse deviations in rainfall. It provides payout against deficit rainfall during the period of Blossom Showers and Backing Showers and excess rainfall during Monsoon Showers. It is not a Yield or Price insurance.
Q. 8: How does coffee rainfall insurance operate?
This Insurance operates on the basis of ‘area approach’. The area for the purpose is ‘coffee zone’ demarcated by Coffee Board. The payout is decided on the basis of the rainfall recorded at coffee zone level, and not at individual coffee plantations. Once a payout triggers at a coffee zone level, it would be deemed that individual insured coffee growers within the coffee zone have suffered similar short fall in rainfall trigger level, and the policy seeks to provide payouts against such contingency for all the insured growers insured under RISC.
No individual coffee estate will be taken into account for this purpose. Even the individual growers harvesting a normal crop may receive the payout if rainfall deviation is triggered at coffee zone level. All growers have liberty to use sprinkler or any other means to save coffee crop since it does not affect claim payout under RISC.
Q.9: What are the different phases (covers) available under RISC?
There are three different phases available under Coffee Rainfall Insurance:
Phase – I: Blossom Showers Insurance: “Blossom Showers” shall mean the rainfall received between 1st March to 15th April (Robusta) / 30th April (Arabica) for the bud to flower (bud enlargement and anthesis). The normal requirement of rainfall is 25 mm in seven consecutive days. Insurance payout shall commence if the rainfall is below 25 mm during the period and full payout is given if the rainfall is below 5 mm. In case there are multiple events and all are less than 25 mm (over 7 consecutive days), the event with maximum rainfall would be considered.
Phase– II: Backing Showers Insurance: “Backing Showers” shall mean the rainfall received from 18th day after commencement of Blossom Showers till 40th day to achieve fruit development & retention. The normal requirement of rainfall is 12 mm in two consecutive days. Insurance payout shall commence if the rainfall is below 12 mm during the period and full payout is given if the rainfall is below 5 mm. Should the requirement of 25 mm fail during Blossom Showers, a minimum of 5 mm would be considered for fulfillment of Blossom Showers and subsequent counting of the period for Backing Showers, failing of which the period for Backing Showers shall be from 1st May till 19th May.
Phase– III: Monsoon Showers Insurance: “Monsoon Showers” shall mean the rainfall received during 1st July to 31st August for the fruit to grow in size. However, in case of Kerala the period is from 1st June to 31st August; and for the zones in Tamilnadu receiving rainfall during North-East Monsoon, it’s from 1st October to 30th November. The rainfall within normal range is beneficial for early ripening and maturity. The aggregate rainfall beyond a specified limit (distinct for each zone) over any seven consecutive days during the period is likely to adversely affect the coffee yield. One event of highest rainfall would be considered for deciding the payout.
Q.10: Is a grower required to buy insurance for all the three phases?
It’s ideal for the grower to buy insurance for all the three phases to get total protection against adverse deviations of rainfall. However, a grower can buy any one or two or a combination of options depending on his / her requirement. Premium is worked out separately for each phase. However, the grower buying all three phases is expected to save on the premium.
Q.11: What is the maximum limit of insurance?
Sum insured (maximum limit of insurance) is Rs. 20,000 per hectare for Robusta and Rs. 30,000 per hectare for Arabica. Sum insured broadly represents the production cost. The phase-wise sum insured is:
| Phase |
Robusta |
Arabica |
| Blossom Showers |
Rs. 10,000 |
Rs. 16,000 |
| Backing Showers |
Rs. 4,000 |
Rs. 6,000 |
| Monsoon Showers |
Rs. 6,000 |
Rs. 8,000 |
| Total |
Rs. 20,000 |
Rs. 30,000 |
Q.12: Why Premium varies across different Coffee Zones and Robusta & Arabica varieties?
Premium varies across different Coffee zones because of differences in rainfall patterns and distribution. Coffee zones with good chance of rainfall during March – May have lower premium compared to Coffee zones with moderately less chance of good rainfall. Similarly, premium rate under Blossom Showers Insurance for Arabica is a little lower compared to Robusta because of slightly larger window of duration (1st March – 30th April).
Q. 13: What are the coffee growing areas for which RISC is available?
Coffee Rainfall insurance is available for Robusta & Arabica in all the Coffee Zones in the States of Karnataka (23 Zones), Kerala (11 Zones) and Tamilnadu (8 Zones). The details of Zones are as follows:
| Karnataka (23) |
Kerala (11) |
Tamilnadu (8) |
| Chikmaglore Dt. |
Kodagu Dt |
Kalpetta |
Yercaud |
| Chikmaglore |
Madekeri |
Chundale |
Bodi |
| Giris |
Kapoklu |
Meenangadi |
Gudalur |
| Mallandur |
Somvarpet |
Mananthavady |
Coonoori |
| Aldur |
Suntikoppa |
Panamaram |
Batlagundu |
| Midigere |
S. Santhe, |
Pulpally |
Pannaikadu |
| Kalasa |
Gonikoppal |
Kattapana |
Perumal Malai |
| Gonibeedu |
Virajpet |
Adimali |
Adalur |
| Koppa |
Siddapur |
Palakkad |
- |
| Balehonnur |
Srimangala |
Vandiperiar |
- |
| Hassan Dt. |
- |
S. Bathery |
- |
| Sakleshpur |
- |
- |
- |
| Belur |
- |
- |
- |
| Hanbal |
- |
- |
- |
| Rayar – Koppal / Magge |
- |
- |
- |
| Yeslur |
- |
- |
- |
Q.14: When can I buy RISC?
Coffee Rainfall Insurance could be purchased till 29th February. The dates for buying Monsoon Showers would end a week before the commencement of the risk period.
Q.15: Where can I buy RISC?
Authorized Agents / Insurance Intermediaries / Representatives of Agriculture Insurance Company of India Ltd. (AIC) are available at the Office of Junior / Senior Liaison Officer (J/ SLO) of Coffee Board in every Coffee Zone in the States of Karnataka, Kerala & Tamilnadu to collect proposal form & premium. These personnel would also help the growers in providing and filling up insurance proposals. Premium net off subsidy may be paid through ‘Account Payable’ cheque drawn in favor of Agriculture Insurance Company (AIC).
Q.16: Is there any subsidy in premium for RISC?
Coffee Board is extending premium subsidy upto 50% of premium for growers with plantation size upto 10 hectares. The subsidy is as follows:
| Arabica |
Robusta |
| Subsidy (per Hectare) |
Subsidy (per Hectare) |
| 50% of the premium amount subject to a ceiling of Rs.2500
|
50% of the premium amount subject to a ceiling of Rs.2000 |
Grower buying insurance needs to pay the premium net off subsidy. Agriculture Insurance Company shall directly receive the premium subsidy amount from Coffee Board.
Q. 17: What is the minimum area (acreage) to be insured under coffee rainfall insurance?
Minimum area to be covered is 0.4 hectares (one acre). The fraction is to be rounded off to nearby decimal.
Q.18: What is the RISC Claim procedure?
The insured grower becomes eligible for payout when there is a certain adverse deviation in actual rainfall (as per the phase, coffee variety & zone). In such case, all insured growers (as per phase, coffee variety & zone) shall be deemed to have suffered the same shortfall in coffee yield and become eligible for claims / payout. The payout is automated in so far as the insured grower is concerned and the grower is not required to submit a claim form.
Q.19: How much time will be taken for Claim settlement under RISC?
Normally Claims are processed and settled within four to six weeks from the end of insurance period. As illustration, Claims / payout of Blossom Showers for Robusta could be processed by 31st May.
Q.20: How RISC addresses production losses caused by other than rainfall adverse deviations?
Production risks arise because of two factors: uncontrolled random inputs of weather and exposure to pests and diseases. Weather risks could arise because of fluctuations in temperature, rainfall, humidity, and wind and hail. Of these, rainfall is the most important variable that has the highest fluctuation and is the least predictable in coffee production. RISC, therefore, addresses the production losses arising out of rainfall risk alone.
Q. 21: Is Rainfall on the day of blossom is covered?
Presume that after seven consecutive days’ with required 25mm rainfall, blossom takes place, and on the eighth day due to heavy rainfall blossom is damaged. This incidence is very rare phenomenon. In any case, it can not be covered as per the terms of the RISC. Only blossom shower of 25mm in seven consecutive days is insured.
Q. 22: Any other natural calamities other than rainfall to be considered for coverage like high wind velocity and land slide?
No. Only rainfall is considered for triggering the payout.
Q. 23: Is it possible to choose Rain gauge station (premium and payouts) of adjacent zone?
Yes, a grower can choose rain gauge station of adjacent zone in the vicinity, provided the chosen coffee zone (rain gauge station) is representative of his / her experience, and is willing to accept the premium and payouts of the particular zone chosen.
Q. 24: How RISC is beneficial to growers?
There are many advantages of RISC, which makes it beneficial for growers in production risk management. The major advantages / benefits are:
- Trigger events like adverse rainfall can be independently verified & measured.
- It allows for speedy settlement of claims, say within 45 days or so after the insurance period.
- All growers – irrespective of Loanee or Non-Loanee; Small / Marginal or Other; Owners or Tenants / Sharecroppers can buy Coffee Rainfall Insurance.
- Subsidy in Premium upto 50% for growers upto plantation holding size of 10 hectares, extended by Coffee Board.
- It provides transparent, fully objective, efficient & direct payouts for adverse rainfall deviations and thus, an effective risk mitigation tool against rainfall risk.
- The grower is not required to submit claim form or other documents as proof for his/ her loss. The claim payout is automatically calculated on the basis of rainfall data collected from the reference rain gauge station at the Zonal level.
- Since the payout is given on the basis of area (zone) rainfall, the grower retains the incentive of putting in extra effort for getting better yield of his / her crop.
Triggers and Payouts of a Arabica Zone (Giris)
| Option |
Condition |
Max.Payout
(Rs.) |
Triggers (mm) & Payout slabs(Rs.) |
| Blossom Shower |
25mm in 7 consecutive days |
16000 |
<25 |
2000 |
| <20 |
3000 |
| <15 |
5000 |
| <10 |
10000 |
| <5 |
16000 |
| |
| Backup Shower |
12 mm in 2 consecutive days |
6000 |
<12 |
1000 |
| <8 |
2000 |
| <5 |
6000 |
| |
| Monsoon Shower |
Cumulative rainfall of more than 430 mm over any 7 consecutive days |
8000 |
430 mm
or more |
3000 |
550 mm
or more |
5000 |
670 mm
or more |
8000 |
Triggers and Payouts of a Robusta Zone (Siddapur)
| Option |
Condition |
Max.Payout
(Rs.) |
Triggers (mm) & Payout slabs(Rs.) |
| Blossom Shower |
25mm in 7 consecutive days |
10000 |
<25 |
1000 |
| <20 |
2000 |
| <15 |
3000 |
| <10 |
5000 |
| <5 |
10000 |
| |
| Backup Shower |
12 mm in 2 consecutive days |
6000 |
<12 |
1000 |
| <8 |
2000 |
| <5 |
6000 |
| |
| Monsoon Shower |
Cumulative rainfall of more than 350 mm over any 7 consecutive days |
8000 |
350 mm
or more |
2000 |
450 mm or
more |
4000 |
550 mm or
more |
6000 |
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