₹50 lakh of stock insured.
₹20 lakh of it sitting with roasters, processors and packers.
Under the Bharat Sookshma Udyam Suraksha wording I reviewed, stock temporarily removed for processing or finishing is covered up to 10% of the stock sum insured, provided it is not insured elsewhere.
That is ₹5 lakh.
The potential gap is ₹15 lakh, even before deductibles, valuation and claim conditions are examined.
This is not an unusual exception in makhana. It is how the value chain works.
Makhana begins as an aquatic crop. It becomes harvested seed, stored commodity, work in process, popped product, packaged food, cargo and finally a receivable on someone’s books.
At every handoff, five facts can change:
- Who owns it
- Who holds it
- Where it is
- What it is worth
- Who carries the loss
The insurance rarely changes as quickly as the stock does.
That is the real makhana risk.
Why this matters now
India produced an estimated 80,590 metric tonnes of makhana in 2025-26. Bihar alone produced 60,000 metric tonnes, close to three-fourths of the national output.
That concentration is an economic strength. It is also an accumulation risk. One region carries most of the production, processing skills and post-harvest infrastructure.
Exports are concentrated too. India exported 7,264.89 metric tonnes of makhana products worth approximately ₹193 crore in 2025-26. The United States, Canada and the UAE together accounted for 77% of exports.
The National Makhana Board has now been launched, supported by a ₹476.03 crore Central Sector Scheme running to 2030-31.
Public investment is coming into cultivation, mechanisation, processing, branding and exports. Risk management must be built into that investment now. Retrofitting it after a cluster-wide loss will cost more.
Follow one batch
The easiest way to understand makhana risk is not to begin with insurance products.
Begin with one batch.
In the pond
Makhana cultivation is exposed to water-depth variation, drought, extreme inundation, seed failure, pests, disease, harvesting difficulty and changing weather patterns.
But water itself is not the peril. Water is the growing environment.
That makes a simple rainfall or flood-index product dangerous. A weather trigger could activate without crop damage or remain silent when yield collapses for another reason. That is basis risk.
Bihar operates the Bihar Rajya Fasal Sahayata Yojana as a crop-assistance mechanism. No grower should be told that makhana is protected unless the applicable crop, district, season, trigger and unit of assessment have been verified.
For makhana cultivation, the first requirement is reliable yield, weather and loss data. Not a hurried insurance product.
At harvest
Traditional harvesting and processing remain labour-intensive. Workers may enter water for collection and later work close to extreme heat during roasting and popping.
This creates drowning, fatigue, burn, eye-injury and musculoskeletal exposures.
Personal accident, health and life protection are relevant. Employees’ Compensation insurance may also be required depending on the legal relationship between the worker and enterprise.
A group personal accident policy does not replace a statutory liability policy. Nor does buying a policy correct an undocumented workforce.
The first control is knowing who is working, for whom and on what basis.
At the roaster
ICAR describes the traditional process as roasting makhana seed at approximately 250°C to 320°C, tempering it for two or three days, roasting it again and then popping it manually with a mallet.
The standard property wording covers fire, but excludes damage to property caused while that property is undergoing a heating or drying process.
That creates an important distinction.
The batch inside the roasting pan and the building it sets alight may receive different claim treatment.
A fire policy is not a substitute for:
- A separated roasting area
- Temperature and batch-time controls
- Safe fuel storage
- Electrical inspection and earthing
- Emergency cut-offs
- Suitable extinguishers
- Burn-response arrangements
- Machinery maintenance and critical spares
Mechanisation reduces some worker exposures. It also creates machinery-breakdown, electrical, operator and production-concentration risks.
The risk does not disappear. It moves.
At someone else’s premises
This is where the largest insurance gap may sit.
The standard wording allows stock at multiple locations on a floater basis where those locations are declared, the aggregate value is insured and reliable records can establish the amount at risk at each location.
That can work for stable, identifiable processors.
It becomes difficult where stock moves through a changing network of roasters, household units, graders and packers.
The temporary-removal clause then becomes important. Its ceiling is 10% of the stock sum insured. It is not 10% of the stock physically outside on the day of loss.
If the stock is not at a declared premises and exceeds that ceiling, the enterprise may be carrying a substantial uninsured exposure.
Insurance follows the insured name, declared location, wording and evidence. It does not follow stock merely because its owner believes it should.
In storage
A sudden flood at a declared premises is a named insured event under the standard wording.
Mould developing slowly because of humidity, poor ventilation or inappropriate packaging is a different loss mechanism.
Same monsoon. Same stock. Different answer.
Pest damage, ordinary deterioration, unexplained shortage and loss of market should not be assumed to be covered.
Theft needs equal care. The in-built BSUS provision relates to theft occurring within seven days of, and caused by, an insured event. It is not a substitute for standalone burglary cover.
A makhana warehouse needs raised pallets, floor clearance, dry ventilation, lot segregation, moisture monitoring, pest records, stock reconciliation and evidence of the stock’s value at its current processing stage.
Inside the packet
Once makhana is packaged and branded, the risk changes again.
Moisture failure, contamination, incorrect ingredients, allergen errors, inadequate labelling or damaged seals can turn a property problem into a food-safety and liability problem.
FSSAI’s recall framework applies across production, processing, distribution, sale, import and export. It requires a food business to be capable of identifying the affected batch and acting through a recall process.
Product liability and product recall are not the same cover.
The product-liability wording reviewed expressly excludes recall, product guarantee and pure financial losses such as loss of goodwill or market. Separate recall protection is available, subject to underwriting and adequate traceability.
Without a batch code and distribution trail, even a valid recall policy may be difficult to use effectively.
Property insurance also does not pay simply because a buyer rejects a consignment for poor popping, uneven grade, excess moisture or failure to meet specification.
Quality risk belongs first in process control and the sale contract.
On the road and on the buyer’s books
The property policy is premises-based.
Makhana moving between the collector, processor, packer, warehouse, port and buyer needs inland-transit or marine-cargo protection, depending on the journey and contract.
Cargo insurance covers defined physical loss or damage. It does not automatically cover a buyer’s refusal to pay, falling prices or an avoidable specification dispute.
Exporters should separately evaluate ECGC or commercial trade-credit protection. ECGC products address defined commercial and political risks, but remain subject to buyer limits, reporting obligations, exclusions and claims conditions.
For domestic sales, the MSMED Act gives qualifying micro and small suppliers delayed-payment protection. Agreed payment periods cannot exceed 45 days, and delayed amounts can attract compound interest with monthly rests at three times the RBI Bank Rate.
There is an important boundary. Retail and wholesale traders brought within Udyam registration under the 2021 inclusion receive that recognition for priority-sector lending. The Ministry’s 1 September 2021 clarification expressly excludes the delayed-payment remedy for those pure trading enterprises.
So do not assume that every Udyam-registered makhana intermediary has the same statutory remedy.
The Makhana Batch Risk Passport
If a business cannot answer five questions about a batch in sixty seconds, that batch is not claim-ready:
- Who owns it?
- Who has custody?
- Where exactly is it?
- What is its value at this stage?
- Which contract or policy carries the loss?
Every commercial batch should therefore carry one simple record:
- Batch identification
- Origin and producer
- Owner and custodian
- Current location
- Quantity and value
- Raw, in-process, popped or packaged status
- Moisture and grade at handoff
- Date and time of transfer
- Transport responsibility
- Buyer specification
- Acceptance or rejection
- Applicable policy or contract reference
Call it the Makhana Batch Risk Passport.
It does three jobs at once: traceability, commercial accountability and claim evidence.
It should work on paper, WhatsApp or a basic digital platform. A system that only large processors can use will exclude the people carrying the most risk.
What should be insured
There is no single “makhana policy.” Different participants require different protection.
Cultivator
- Verified crop-assistance entitlement
- Personal accident, health and life cover
- Equipment cover where machinery is owned
Do not represent cultivation loss as insured until the applicable notification or issued policy proves it.
FPO, aggregator or trader
- Stock and property insurance
- Floater cover for stable declared locations
- Burglary
- Inland transit
- Fidelity and money insurance where relevant
Custody and stock records are non-negotiable.
Processor
- Bharat Sookshma or Bharat Laghu Udyam Suraksha, as applicable
- Machinery Breakdown
- Business Interruption
- Employees’ Compensation
- Group Personal Accident
- Public liability
The property policy’s heating-process exclusion must be examined. Conventional business-interruption cover also requires insured physical damage and defensible financial records.
Brand owner
- Property and stock
- Product and public liability
- Product recall
- Cyber and fidelity protection
- Business interruption
Rejected stock, recall costs and lost goodwill should never be assumed to sit inside a standard liability policy.
Exporter
- Marine cargo
- ECGC or trade-credit insurance
- Overseas product liability
- Product recall where available and commercially justified
The sales contract must define specifications, inspection, rejection rights, Incoterms, title transfer and payment obligations.
Promoter
- Personal term insurance
- Key-person cover where legally and commercially suitable
- Health and disability protection
- Succession arrangements
The enterprise cannot be protected if the person controlling buyers, suppliers, credit and production remains a single uninsured point of failure.
Get the value right
Makhana changes value as it moves from raw seed to popped and packaged product.
The BSUS wording reviewed values raw material at landed cost, work in process at input cost and finished stock at manufacturing cost. Goods sold but not delivered may be treated differently under the wording.
Underinsurance is waived only up to 15%. If the applicable sum insured falls below 85% of the insurable value, a proportionate reduction can apply to the claim.
A single annual stock estimate is unlikely to remain accurate through procurement, processing and festive demand cycles.
Stock values should be reviewed monthly. Peak-season limits, declaration arrangements and all processing locations should be examined before the stock moves, not after the fire or flood.
What the National Makhana Board should do
Do not begin with a compulsory cluster policy or a blanket premium subsidy.
Begin with a one-season risk and resilience pilot covering a traditional pond cluster and a field-based cultivation cluster.
The National Makhana Board should lead it with Bihar’s horticulture authorities, ICAR’s National Research Centre for Makhana, ICAR-CIPHET, APEDA, NABARD, FPOs, processors, exporters, insurers and brokers.
The pilot should produce five things:
- A common loss taxonomy covering cultivation, people, stock, processing, transit, quality, liability and payment.
- The Makhana Batch Risk Passport.
- Model clauses for custody, processing, sale, rejection and transit responsibility.
- A minimum storage, fire-safety and traceability standard.
- An anonymised loss and claims dataset capable of supporting future insurance design.
Measure whether the pilot improves traceability, corrects insurance discrepancies, reduces stock and quality losses, improves claims documentation and lowers the cost of servicing cover.
Only then should the Board examine a crop-index, fixed-benefit recovery or cluster-insurance product.
Public money should first make the risk visible and controllable. It should not subsidise a policy before anyone knows whether that policy follows the stock.
What would change my mind
The public material I reviewed does not provide makhana-specific data on claim frequency, uninsured loss, worker injury, cargo damage, product recall or buyer default.
If field data show that most commercial stock stays at stable declared locations, processing losses are low and existing claims settle without material custody or valuation disputes, then the handoff problem is smaller than this analysis suggests.
That is why the next step is a measured pilot, not a nationwide conclusion.
The bottom line
The pond grows the crop.
Processing creates the value.
The handoff decides who carries the loss.
Do not begin by selling another policy.
Begin with one batch. Record who owns it, who holds it, where it sits, what it is worth and who answers if it is lost.
Then decide what to prevent, what to put into the contract and what to insure.
When your makhana changes hands tonight, who owns the loss?
Desk-researched commentary in my personal capacity. It is not a surveyed case, underwriting recommendation or legal opinion. Coverage depends on the issued policy, schedule, endorsements, contracts and facts of the loss.