Cracking the Cattle Code, RFID style

The importance and well being of cattle in the livelihood of a dairy farmer is singularly a defining parameter upon which the farmer’s survival is dependent.  Loss of such cattle due to diseases, non-availability of vaccinations, ignorance as regards preventive healthcare measures etc results in a serious loss – crippling the farmer’s economic situation and exposing him to the jaws of poverty.

To mitigate such risks, Dairy Network Enterprises (DNE) in close coordination with Kshetriya Gramin Financial Services (KGFS) and Centre for Insurance and Risk Management (CIRM) has on Sep 17, 2009 facilitated the launch of a unique cattle insurance product in the Thanjavur region of Pudhuaaru KGFS.

Its uniqueness stems from the innovations that are embedded both from a product and process perspective. Some of it being:

• Usage of RFID tags for unique identification of cattle and for fraud prevention.
• While the existing premiums charged for such a product is around 4-4.5 percent of the value insured, with this product it is around 2.9 percent plus healthcare charges. Such a reduction in premium rates is because the transaction costs are kept in check, and through the integration of different technology platforms, information is passed seamlessly with no paperwork and human intervention end-to-end.

• On the spot cover issued in real time, which means the farmers gets cover on his cattle the very minute he pays the premium. Conventional Cattle Insurance products take 15 days to issue cover.

• Fast-track settlement of claims in 72 hours. While usually for such products the settlement time is around 40 to 60 days making the small and marginal farmers extremely vulnerable during such long duration.

• Each policy cover comes with guaranteed access to basic preventive healthcare measures in the form of deworming and vaccination required for the period of a year.

While KFGS is involved with the financial aspects of the product, DNE deals with the non-financial aspects as in providing the electronic backend (hardware and software) for cattle registration and data recording, providing manpower for the healthcare services delivery and enabling access to preventive healthcare services.

Within a few days of its launch, 9 policies have been issued and the intent is to replicate the product across different KGFS regions in Pudhuaaru KGFS, Shahastradhaara KGFS and Dhanei KGFS. One of the biggest bottlenecks in enabling such replication is difficulty in finding suitable manpower, especially veterinarians.

Independently on its own, the DNE aims to offer the electronic backend (which enables planning and monitoring of healthcare services delivery along with insurance product delivery) to interested NGOs, MFIs, veterinarian-entrepreneurs, small dairy plants seeking to offer healthcare and productivity management services to dairy farmers anywhere in India.  The intended revenue model being that the interested party adopts a pay-per-animal model after making a minimum upfront investment. In cases where the interested parties find it difficult to source funds for the upfront investment (approximately Rs.50000), DNE would facilitate access to requisite funds and may itself offer loans which may be repaid under flexible terms.

Important point being that DNEs partnership could be used for purposes beyond electronic support for healthcare service delivery. Partnership with DNE would cover other broader areas like access to technical support and training for delivery of preventive healthcare and productivity management services, access to cheaper vaccination, drugs and other dairy inputs as well as other forms of linkages like linkages with veterinary institutions.

The DNE is also in talks with multiple players to work out a new kind of engagement between milk buyers and farmers with the participation of financiers to create a win-win solution for all the parties concerned.

Truly these are exciting times for DNE lead by Avishek Gupta, as it enters newer frontiers.

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