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AGRICULTURE/INSURANCE : EUROPEAN AGRICULTURAL RISK INSURANCE IS NOT FORESEEABLE.

In a report on agricultural risk management and insurance schemes, experts from the EU's Joint Research Centre state that Europe should limit its action to encouraging the organisation of insurance coverage at member state level. Developing an EU scheme is out of the question. The structure of farms and the geographical, climate and socio-economic diversity of risks to be covered are too great, notes the JRC.

'Given the high diversity of risks and of socio-economic backgrounds in the EU27, it does not seem advisable to settle on a homogenous common insurance system,' concludes the Joint Research Centre. The EU should nevertheless act to encourage the use of such mechanisms in the member states through the following actions: support for the organisation of databases at farm level; partial subsidies for national systems; establishment of a common regulatory framework; and development of adequate control instruments.

The development of insurance schemes depends in large measure on the impetus provided by the public authorities, note the JRC experts. Private insurers offer policies for 'non-systemic risks' such as hailstorms. For wider coverage, however, the member states are key. This is one of the reasons for delays in the development of such tools in the meat sector, where health-related crises are covered by public emergency aid.

To give farmers an incentive to take out insurance policies to cover such risks, the public authorities could limit the use of emergency funds by compensating for only 50% of damages, notes the report. Agricultural insurance premiums paid by farmers in the EU amount to 1.5 billion a year, while the average amount of insurance indemnities paid is close to 1.1 billion.

'DOING MORE AND BETTER'

EU Agriculture Commissioner Mariann Fischer Boel, who is well aware that the report by the Joint Research Centre is not likely to 'make the front pages', nevertheless stresses on her blog the importance of 'doing more and better [ ] to help farmers develop solid risk-management strategies'. This is necessary despite the fact that the EU already has 'good risk-management tools with the CAP, such as direct payments, market mechanisms and certain rural development policy tools'. 'Markets are more volatile and weather is less predictable,' she adds.

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Title Annotation:European Union. European Commission. Joint Research Centre
Publication:European Report
Geographic Code:4E
Date:Oct 9, 2009
Words:363
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