Risk management in agriculture: single threshold for compensation for damages for farms

Risk management in agriculture: single threshold for compensation for damages for farms

An ever more adverse climate, increasing topicalization characterised by the repeated occurrence of strong winds, rain, frosts, floods and drought, and the proliferation of new parasites and pathogens (for example, the brown marmorated stink bug, brown spot, etc.), which are just as capable of jeopardising production or yield as the most severe weather events, all these factors give rise to reflection as to whether current risk management measures for farms (Regulation (EU) No 1305/2013) are fit for purpose.

The parameters employed at present for new instruments do not match the reality of the situation: the same farm, in the same year and with the same production or yield has to cope with many disastrous events, some of which are difficult to insure against (plant diseases) and so are covered with funds. The two guarantees, taken individually, are often less than the current minimum threshold for compensation for damages, meaning damages cannot be liquidated (also theoretically 50% overall).

Farmers’ representatives and the national agricultural protection association ASNACODI recognise, given the sum total of damages that the threshold for compensation payments needs to be assessed not per instrument but per production or yield.

On 29 September 2020, Italian Member of the European Parliament Mara Bizzotto of the Identity and Democracy Political Group posed a written parliamentary question to the European Commission. MEP Bizzotto asked the Commission “is it considering changing the current parameters and providing in the future for a single threshold for compensation for damages when the farm has recourse to more than one instrument to cover the various risks affecting the same production or yield and is it considering introducing a mandatory disaster risk mutual instrument (i.e. for frost, drought, floods, hail, etc.), at cost farmers can meet?”

On 12 November, Agriculture Commissioner Janusz Wojciechowski responded on behalf of the European Commission. Commissioner Wojciechowski explained that “in comparison to the current programming period, the Commission proposal for a Common Agricultural Policy (CAP) Strategic Plan Regulation (SPR) aims at increasing the flexibility at the disposal of Member States to support farmers managing agricultural risks outside their control in line with their specific needs”. He further clarified that “this type of support could be granted in particular, but not only, in the form of financial contributions to premiums for insurance schemes and to mutual funds that cover production or income losses”.

Commissioner Wojciechowski expressed that the Commission “welcomes innovative risk management interventions in line with the SPR and the conditions further set by the Member States in their future CAP Strategic Plan”.

Commissioner Wojciechowski highlighted that “an effective management of risks is essential to maintain and enhance the viability of individual farms, rural economies, and the competitiveness of the EU agricultural sector as a whole” and added that “for this reason, the Commission proposal for a CAP Strategic Plan Regulation establishes that the risk management type of intervention be mandatory for the Member States”.

In closing, Commissioner Wojciechowski declared that “the Member States must therefore offer tools under this type of intervention to farmers in line with their identified needs”.

Photo Credit : https://www.thehansindia.com/posts/index/Environment/2015-10-26/Risk-Management-in-Agriculture/182531

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