Bangalore: State-owned Agriculture Insurance Co. (AIC) will begin its first payout of claims to coffee growers under an insurance cover this year that is linked to changes in rainfall in the country’s coffee growing regions. Subscribing coffee growers get compensated for weather fluctuations—lower or higher than normal rainfall within a specified area and period—without assessing the crop damage in a season, in the Rainfall Insurance Scheme for Coffee (RISC), launched in May.

The insurance company will pay compensation based on the rainfall data from the region. The growers do not have to prove the losses under the scheme, the first such insurance cover for any commodity in India. Coffee Board, the state-run nodal agency for the commodity, said Friday it estimates India’s coffee production to hit a 10-year low at 262,000 tonnes for the year to September, due to heavy rain in Karnataka and Kerala. The two southern states account for more than 90% of India’s coffee production. The bean production is expected to drop by 10% over last year’s production of 288,000 tonnes.

“We will be disbursing claims to the tune of Rs8 crore to about 8,000 growers, while the premium collected was Rs1.5 crore for the monsoon trigger alone," said Sukumar Narayan, regional manager, AIC. The Coffee Board gives 50% subsidy on the premium to small growers—who own less than 10 hectares, and has earmarked Rs22.87 crore per year. Nearly a quarter of the 54,000 small coffee growers had availed the cover in Karnataka, while there were no subscribers from Kerala.