Agricultural risk management in Europe

Replaced with revised version of paper 11/18/08Risk management policy, agricultural insurance, calamity funds, ad-hoc aids, natural disaster, Production Economics, Risk and Uncertainty,

Mapping climatic risks in the EU agriculture

Replaced with revised version of paper 11/18/08.Agrometeorological models, climatic risk, European Union, Vegetation indices, Environmental Economics and Policy, Risk and Uncertainty,

Agricultural Insurance Schemes

Agricultural producers face a series of risks affecting the income and welfare of their households. These are mainly production risks related to weather conditions, pests and diseases, market conditions, liberalization policies, climate change, etc. In recent years the European Union has been considering a possible integration of risk management in the common agricultural policy and is analysing risk and crisis management strategies to provide an improved response to crises in the agricultural sector. This report reviews the agricultural risk management systems in the EU-27 (candidate countries Turkey and Croatia are also analysed) with a special focus on types of agricultural insurance. The study contains a collection of data on the realities and modalities of agricultural insurance in Europe. This information mainly comes from fact sheets filled in by experts or consultants from the different European countries and data from the European Committee of Insurers (CEA). Many of these data were unpublished because there is no obligation for the insurance companies to report to the EU institutions. The report quantifies and maps different types of risks, from climatic risks to yield and revenue risks. The role of Governments in helping farmers to face disasters is analyzed for every country: providing aid ex-post and offering or subsidizing insurances. The Member States definitions of crisis and disaster when authorising state aids are described and contrasted with the EU and international legislation. Aid is sometimes given on an ad-hoc basis through compensation schemes, or funds partially financed by the agricultural sector (on a voluntary or compulsory basis). Mutual funds, calamity funds and ad-hoc payments existing in European countries are summarised. The levels of ad-hoc payments per country are compared. Agricultural insurances are fostered in a number of countries. The different types of agricultural insurance systems and key figures in each country are analysed. Some technicalities are described, such as reinsurance, triggers and deductibles. The relationship between Government involvement and insurance development is highlighted. Usually private companies insure only hail and fire, and the government subsidies and public reinsurance are needed to make possible the insurance of agricultural systemic risks. One conclusion is that the risk management tools available in the Member States (MS) could be further developed. Conditions for a feasible EU-wide insurance scheme have been analysed. The possible amount of costs of an EU-supported insurance system has been roughly quantified for a few hypothetical scenarios. However, given the heterogeneous situation in the MS, the interest of a harmonised EU-wide system of agricultural insurances is debatable.JRC.G.3-Agricultur

Experiencias de gestion de riesgos y crisis en la Union Europea

Los agricultores haven frente a una serie de riesgos que afectan a su renta y al bienestar de sus familias. Son principalmente riesgos relacionados con las condiciones climaticas, plagas y enfermedades, condiciones del mercado, politicas liberalizadores o cambio climatico. En los ultimos anos la Union Europea ha venido considerando la posible integracion de la gestion del riesgo en la Politica Agraria Comun y Esta analizando estrategias de gestion de riesgos y crisis para proporcionar una respuesta mas util a las crisis en el sector agrario. Este trabajo ofrece un examen de los sistemas de gestion del riesgo en Europa (EU27), con especial atencion a los eguros agarios. SE discuten los diferentes tipos de sistemas de seguros agarios que existen en Europa y las figuras clave en cada pais. Se destaca la relacion entre la implicacion del Gobierno y el desarrollo de los seguros. Por lo general las companias privadas aseguran solo el pedrisco e incendio, pero al aumentar el compromiso del gobierno en el seguro, el sistema de seguros ofrece coberturas mas amplias, posibilitando el aseguramiento de los riesgos sistemicos de la agricultura. La ayuda ex-post, con motivo de los desastres en la agricultura, se proporciona sobre una base ad hoc o a traves de programas compensatorios o de fondos de calamidad, que pueden ser parcialmente financiados por el sector agrario con caracter voluntario u obligatorio. Se resumen los pagos ad hoc y los de los fondos de calamidad en la mayor parte de los paises europeos y se comparan sus niveles. El nivel de aseguramiento existente es generalmente insuficiente para mitigar una reduccion significativa de la renta en anos desfavorables. Por lo tanto, cabe deducir que existe un potencial para un mayor desarrollo de los instrumentos de gestion del riesgo en los Estados mienmbros. Sin embargo, dada la heterogeneidad observada entre ellos, es discutible el interes por un sistemas armonizado de seguros en toda la UE. Podrian considerarse otras alternativas, tales como facilitar/subsidiar la formacion de bases de datos de la produccion/renta a nivel detallado (explotacion); promover reaseguros publicos; clarificar/homogeneizar el entramado legal; subsidiar parcialmente los sistemas que entren en dicho marco legal...Agricultural producers face a series of risks affecting the income and welfare of their household. These are mainly production risks related to weather conditions, pests and diseases, market conditions, liberalization policies, climate change, etc. In recent years the European Union has been considering a possible integration of risk management in the common agricultural policy and is analyzing risk and crisis management strategies to provide an improves response to crises in the agricultural sector. The paper makes a review of the agricultural risks management systems in Europe (EU27) with a special focus on agricultural insurances. The different types of agricultural insurance systems existing in Europe and key figures in each country are discussed. The relationship between Government involvement and insurance development is highlighted. usually, private companies insure only hail and fire, but as the government involvement in insurance increases, more comprehensive coverage is provided by the insurance system, becoming possibly the insuring of agricultural systemic risks. Ex-post aid to disasters in agriculture is given on an ad-hoc basis or through compensation schemes or calamity funds, which can be partially financed by the agricultural sector on a voluntary or compulsory basis. Payments ad-hoc and from calamity funds in most European countries are summarized and their levels are compared. The existing insurance level is generally insufficient to smooth significant income reduction in bad years. Thus, there is a potential for further developing the risk management tools available in the MS. However, given the MS's heterogeneity, the interest of a harmonized EU-wide system of agricultural insurances is debatable. Other alternatives could be considered, such as facilitating/subsidizing the composition of yield/income databases at a detailed level (farm); promoting public reinsurance; clarifying/homogenizing the legal framework; partially subsidizing national systems which are within the framework

Mapping climatic risks in the EU agriculture

Several sources of data have been used to give a geographical picture of the level of risk in the EU agriculture: Yield data from the Eurostat REGIO database, FADN (Farm Accountancy Data Network), agro-meteorological models and satellite images. Most of the maps produced correspond to the crop sector

Agricultural risk management in Europe

This paper is based on a study performed by the IPSC-Agrifish unit of Joint Research Centre (JRC) of the European Commission for DG Agriculture under request of the European Parliament. Most information comes from fact sheets collected by experts or consultants in the different countries. The definitions of crisis and disaster eligible for public aid in EU member states are analysed and compared with the "Community guidelines for state aid in the agriculture sector" (EC, 2000). New Commission Guidelines and a new Regulation have been adopted in December 2006. The paper makes a review of the agricultural risks management systems in Europe (EU27) with a special focus on agricultural insurances. The different types of agricultural insurance systems in Europe and key figures in each country are analysed. Some technicalities like reinsurance, triggers and deductibles are described. The relationship between Government involvement and insurance development is highlighted. Usually, private companies insure only hail and fire, but as the government involvement in insurance increases, more comprehensive coverage is provided by the insurance system, becoming possible the insuring of agricultural systemic risks. The role of Governments is analyzed for every country: offering or subsidising insurances and providing aid ex-post. Aid related to risks in agriculture is also given on an ad-hoc basis or through compensation schemes or calamity funds, which can be partially financed by the agricultural sector on a voluntary or compulsory basis. Payments ad-hoc and from calamity funds in most European countries are summarised and their levels are compared. The existing insurance level is generally insufficient to smooth significant income reduction in bad years. Risk management tools available in the MS could be developed further. However, given the heterogeneous situation, the interest of a harmonised EU-wide system of agricultural insurances is debatable. Conditions for a feasible EU-wide insurance scheme are analysed and classified into a) decisions of the policy makers (political criteria); b) decisions of the private sector: insurers, re-insurers and farmers (socio-economic criteria); c) technical conditions. Last, the possible amount of costs of an EU-supported insurance system has been roughly quantified for a few hypothetical scenarios, under given assumptions

Agricultural Risk Management in Europe with a Special Focus on Crop and Livestock Insurance

This paper is based on a study performed by the IPSC-Agrifish unit of Joint Research Centre (JRC) of the European Commission for DG Agriculture under request of the European Parliament (Bielza et al. 2006; Bielza et al. 2009). Most information comes from fact sheets collected by experts or consultants in the different countries. The definitions of crisis and disaster eligible for public aid in EU member states are analysed and compared with the ¿Community guidelines for state aid in the agriculture sector¿ (EC, 2000). New Commission Guidelines and a new Regulation have been adopted in December 2006. The paper makes a review of the agricultural risks management systems in Europe (EU27) with a special focus on agricultural insurances. The different types of agricultural insurance systems in Europe and key figures in each country are analysed. Some technicalities like reinsurance, triggers and deductibles are described. The relationship between Government involvement and insurance development is highlighted. Usually, private companies insure only hail and fire, but as the government involvement in insurance increases, more comprehensive coverage is provided by the insurance system, becoming possible the insuring of agricultural systemic risks. The role of Governments is analyzed for every country: offering or subsidising insurances and providing aid ex-post. Aid related to risks in agriculture is also given on an ad-hoc basis or through compensation schemes or calamity funds, which can be partially financed by the agricultural sector on a voluntary or compulsory basis. Payments ad-hoc and from calamity funds in most European countries are summarised and their levels are compared. The existing insurance level is generally insufficient to smooth significant income reduction in bad years. Risk management tools available in the MS could be developed further. However, given the heterogeneous situation, the interest of a harmonised EU-wide system of agricultural insurances is debatable. Conditions for a feasible EU-wide insurance scheme are analysed and classified into a) decisions of the policy makers (political criteria); b) decisions of the private sector: insurers, re-insurers and farmers (socio-economic criteria); c) technical conditions. Last, the possible amount of costs of an EU-supported insurance system has been roughly quantified for a few hypothetical scenarios, under given assumptions.JRC.DG.G.3-Monitoring agricultural resource

Risk Management and Agricultural Insurance Schemes in Europe

Agricultural producers face a series of risks affecting the income and welfare of their households. These are mainly production risks related to weather conditions, pests and diseases, market conditions, liberalization policies, climate change, etc. In recent years the European Union has been considering a possible integration of risk management in the Common Agricultural Policy (CAP) and is analysing risk and crisis management strategies to provide an improved response to crises in the agricultural sector. The report reviews the agricultural risk management systems in the EU-27 (candidate countries Turkey and Croatia are also analysed) with a special focus on types of agricultural insurance. The study contains data collected by experts or consultants from the different European countries. Many of these data were unpublished. Governments have an important role in helping farmers to face disasters. Usually they provide ex-post aids and sometimes they offer or subsidise insurances. Ex-post aid is either given on an ad-hoc basis, either through compensation schemes or through funds partially financed by the agricultural sector (on a voluntary or compulsory basis). Before the entry into force of the 2006 Regulation (EC, 2006a), each Member State (MS) had adopted its own definition of crisis and disaster for authorising state aids. The revision of the mutual funds, calamity funds and ad-hoc payments existing in European countries shows that about 50% of the annual ad-hoc payments are given for natural disasters like drought, frost, flood and excessive rain, and that in some countries aid is only given for livestock diseases. Several types of agricultural insurance systems exist in each country and key figures describe their technicalities, such as reinsurance, triggers and deductibles. Agricultural insurances are fostered in a number of countries. Government¿s involvement is crucial for insurance development: while private companies insure only hail and fire, the insurance of agricultural systemic risks becomes affordable for farmers only with government subsidies and/or public reinsurance.JRC.G.3-Monitoring agricultural resource