Public agricultural insurance

Subject: Public agricultural insurance

The year 2018 was disastrous for Portuguese agriculture. In spring 2018, 85% of Portugal was in severe or extreme drought. Not even the Azores escaped the drought, which caused shortfalls in the production of green maize of between 50% and 80%, forcing many livestock farmers to reduce the size of their dairy and suckler cow herds.

A significant part of mainland Portugal’s irrigable area could not be irrigated in 2018 because of the drought, causing losses of over EUR 1.1 million for the agricultural sector according to FENAREG (Portuguese Irrigation Federation). Lastly, agricultural losses estimated at EUR 30 million were reported following the passage of storm Leslie through the Centro region of Portugal on 13 and 14 October 2018.

Experience has shown that agricultural insurance with public co-funding is failing to adequately respond to weather-related losses. What is the Commission’s view of this situation? Is it prepared to support public agricultural insurance programmes that are fully managed and controlled by Member States so that they become instruments to serve farmers rather than just being a source of financial gain for financial groups?

Answer given by Mr Hogan on behalf of the European Commission

(24 January 2019)

The development of effective risk management systems is a priority of the common agricultural policy (CAP) as it is key for promoting a resilient and viable agricultural sector.

As regards insurance schemes, high premia are seen as one of the main barriers for farmers to subscribe (1). For this reason, rural development support can be provided in the form of financial contributions to premia for crop, animal and plant insurances, covering economic losses caused, among others, by environmental incidents.

Support is also available in the form of financial contribution to mutual funds, providing financial compensation to farmers affected by severe income or production losses. The Omnibus Regulations have introduced more flexibility for using these tools in the 2014- 2020 Rural development Programmes.

Risk management has been reinforced in the Commission proposal for the CAP post 2020, requiring Member States to program adequate risk management tools into their future CAP strategic plans. In line with the new delivery model proposed, more Member States would have more flexibility in designing and implementing such tools.

This should help Member States to design risk management interventions in line with farmers’ risk management needs and in consideration of the specific national and regional circumstances.

⋅1∙ Also see https://ec.europa.eu/agriculture/external-studies/2017-risk-management-eu-agriculture_en | | ( | | )