2023-10-09 05:05:43
The Ministry of Agriculture, agricultural organizations, Agro-food Cooperatives, insurance entities through Agroseguro, European Commission, FAO and individual representatives from different countries, including the United States, held this week in Jerez de la Frontera a Congress to debate the situation and future of agricultural insurance, a topic in which Spain is one of the pioneering countries. There is concern about climate change, the increase in accidents and the need to articulate balancing mechanisms between insurers and insured. The key is to ensure, through public subsidies, that the cost of the premiums is attractive for the farmer and to make the coverage of the productions realistic, so that insurance that is not of interest is not offered.
In agricultural insurance policy, although there are dissenting voices, there is not much doubt, neither among insurers nor in the countryside, about the existence of climate change. The companies are the ones who know it most clearly. For the employer’s association, Agroseguro, the agricultural sector faces a new reality that is reflected in three verifiable facts. First, droughts are becoming more frequent and have gone from a periodicity of several years to repeating themselves practically every two seasons or in consecutive seasons. Second, the phenomena are increasingly virulent, especially due to torrential rains and floods. Third, they are increasingly dislocated in time: frosts are no longer a thing of the first months of the year but last until the end of spring.
In the case of Spain, this climate change would be reflected, according to provisional data from insurance entities, in an increase in accidents. In recent years, it has gone from around 800 million euros to more than one billion that have already been paid this year, half only due to the drought, with plans to exceed 1,200 in the coming months, at the end of the year. million, a historical record figure that far exceeds the value of premiums that remain at around 858 million. And this data, repeated for several years, has its consequences on insurance companies.
A first effect of this mismatch between payments for compensation and premiums received – although the companies also have among their income the charges for the marketing of the policies – is the need to attend each campaign to adjust results to the existing funds in the Consortium’s coffers. of insurance, which year after year is being emptied until it currently stands at less than 400 million. The Consortium funds ensure that the companies do not lose, although a new scenario would be reached if that amount is exhausted.
Agricultural insurance has been, and is, although not the only one, a key instrument of agricultural policy. For this reason, in recent years the Ministry of Agriculture has maintained a commitment to support, articulating aid to subsidize the cost of premiums, going from just over 200 million euros to the current 357 million, an amount that represents more than 45% of all public support for this policy. To this figure are added some 100 million euros from all the autonomous communities, from where there is, however, no general policy of coherence towards the sector. While some make a clear commitment to insurance, others remain reticent, which, in some cases, causes discriminatory treatment between neighboring farmers who operate in the same market. A clear example of this case would be the difference in support between the Valencian Community, with 27 million euros to subsidize premiums, and the four million from its neighboring Region of Murcia.
Adding these public aids together, agricultural insurance has a ceiling of 70% in subsidizing premiums when it comes to young professionals in agricultural activity, with an average support for the rest of more than 50%.
Give it a spin.
Today, in the shadow of this climate change, a global debate on this policy is required. All parties agree on the need to “give it a spin” to achieve the viability of effective agricultural insurance with sufficient coverage that would require responses from three groups: from the Administrations, from the insurance companies and from the sector itself.
Insurers have in their hands the possibility of reducing management costs and the need to adjust premiums, to achieve greater universalization of insurance and thus a greater balance in results so that they do not only insure the highest risk territories and farmers. , as well as trying to incorporate into insurance crops that are currently reluctant to subscribe to policies, such as olive groves – the antithesis of what happens with herbaceous crops.
The future of agricultural insurance also depends on having interest premiums and for this public funds have been and will be key to supporting them at a time of high accident rates. The sector considers the funds provided by the Ministry of Agriculture to be sufficient, but not those from the autonomous communities.
However, the agricultural sector considers that the countryside has been a passive subject suffering from greater accidents caused by the existence of greater pollution in the atmosphere, the emission of greenhouse gases… in short, from this climate change originating, especially, in the activity of industrial sectors. Consequently, more funds are demanded to avoid paying more expensive premiums due to the higher accident rate, but they must be funds from those responsible sectors, not from agricultural policy.
In a global debate on the future of agricultural insurance, the activity of farmers themselves also bears its share of responsibility to stop the damage. There is an agricultural accident rate that fundamentally depends on meteorological conditions, but another that can be modulated by the activity of each farmer. In this framework, factors such as soil tillage conditions, land preparation, sowing periods, the choice and selection of seeds or seedlings, the use of water, the cultivation land or the chosen places are important. to plant each variety of fruit based on the climatic characteristics of each area… By managing these factors well, a high accident rate caused by the inappropriate option when scheduling a crop could be avoided. Although, an activity that sleeps under the stars, despite all the precautions, can always be cannon fodder in the event of an unexpected incident.
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