Agriculture insurance can be a particularly significant factor in the sustainability of agricultural production and related activities. Agriculture, as the backbone of many developing economies and a provider of livelihoods for millions of people worldwide, is inherently exposed to numerous risks, the effects of which can be catastrophic for producers as well as end users. Climate risks, whose tendency is increasing and which are increasingly being identified as a serious factor in numerous business sectors, have particular significance in agriculture.
The situation where diverse risks are generated from season to season further directs attention to the need for adequate improvement of agricultural production in terms of the application of agrotechnical measures, but also to the need for proper management of development and operations, especially in planning and managing finances and risks, which certainly includes adequate agricultural insurance.
Alongside all the usual challenges of doing business in open global market, global crises also pose a risk, bringing entirely new, expected, and certain consequences, as well as entirely unexpected ones. We have witnessed that the COVID pandemic has caused profound changes in most sectors, with no signs of returning to the “old normal.” Just as markets began to stabilize at a new equilibrium level, the Ukrainian crisis began. One of the first measures taken by various countries to varying degrees was the creation of reserves, price freezes, and the imposition of trade restrictions, which based on historical experience can lead to new risks for producers.
As an additional element, 2022 was a drought year and as such, it brought the effect of climate risks on top of the effects of the global crisis. This was followed by the year 2023 when most of us encountered the concept of a “supercell storm” for the first time.
Agriculture Insurance with EuroSolutions
The primary objective of agricultural insurance is to reduce the financial risk and uncertainty faced by farmers and the agro-industry, thus enabling more efficient management of production and income. This type of insurance provides additional security in the event of unforeseen events or losses that may occur during the cultivation of crops, fruits, vegetables, or vineyards, as well as the raising of livestock and poultry.
EuroSolutions offers significant customization of coverage and insurance policies for agricultural risks according to the specific needs and risks of each agricultural enterprise. Additionally, EuroSolutions’ methodology in implementing insurance for farmers involves engaging experts and appraisers, properly determining the incurred damage, and assessing the amount of compensation.
Crop insurance, as a form of security, provides economic protection for annual or perennial plants, regardless of whether they are main crops, cover crops, or catch crops. Crops such as cereals, vegetables, orchards, vineyards, planting material, flowers, ornamental plants, as well as young forest plantations can be insured. Even plant species that are not cultivated, growing freely in nature but utilized by humans, such as reeds and poplars, can be insured. Regardless of whether they are annual or perennial crops, only the annual yield is insured.
Crops and fruits are insured against basic risks, which include:
- Hail
- Fire
- Lightning strike
Additionally, insurance can be contracted for risks such as:
- Storms
- Loss of quantity and quality of fruit and table grapes
- Srping frost
- Floods
Animal insurance is one of the oldest branches of insurance. All types of domestic and wild animals can be insured, although the focus is mainly on livestock, which has the largest share in this type of insurance. It is possible to insure cattle, sheep, goats, pigs, poultry, and horses. Animal insurance is specific in that the subject of insurance is a living being that operates according to biological laws, making the possibility of an insured event more frequent compared to crop production.
Insurance covers the risks of animal death or forced slaughter resulting from:
- Accidents
- Diseases
- Natural risks
Additionally, it is possible to contract:
- Insurance for animals due to the consequences of birth
- Insurance against the risk of calf loss at birth
- Insurance against dangerous infectious diseases, such as swine fever
As we ourselves witness, agroecological conditions are dynamically changing, making the need for protecting agricultural crops and animals increasingly important. Agricultural insurance, along with incentives and agricultural financing, is strategically important for eradicating extreme poverty and promoting shared prosperity globally.
The importance of agricultural insurance is undisputed, as evidenced by the incentives provided by the government and measures of the Government of the Republic of Serbia in the form of subsidies that have been implemented for many years. The state reimburses a portion of the paid insurance premium to registered agricultural holdings – subsidizing 40-45% of the paid insurance premium, reduced by the amount of tax. All registered active commercial agricultural households in the form of legal entities, natural persons, or entrepreneurs are eligible for reimbursement.
In many countries, agricultural risks insurance has developed into a stable and advanced industry. Statistical data indicate that billions of dollars are lost in the agricultural sector every year due to unforeseen events and situations. In such a context, agricultural insurance is the primary means of reducing losses and can ensure the stable operation of agricultural producers.