In Bulgaria and around the world, the farmers cannot insure against risk of drought in agriculture. Nor can they do so against certain diseases on cereals and fruit plantations. These are the most important adverse circumstances for farmers. However there is a solution to the problem and some countries have even found it. This is the so-called Farmer’s Earnings insurance that exists in the U.S. and some of the European countries such as the Netherlands and France.
Basically the new policy in the agricultural insurance is as follows. A particular scheme calculates the average crop yield for different crops. If a farmer fails to achieve it during a year of drought, floods, storms, etc., the insurance pays so that the expected income is actually received. A farmer has previously chosen the percentage of lost income to be covered by the insurance. This rate across U.S. ranges from 65 to 75 percent. Of course, a higher protection rate automaticly means higher insurance premium to be paid.
At a meeting in early March between farmers and the Bulgarian Association of Insurers the experts examined the idea of introducing insurance on the income of farmers in agriculture, Hristo Tsvetanov, head of the Association of Agricultural Producers in Bulgaria told the BANKER weekly.
Insurers are interested in the proposed scheme, but not all are optimistic that it could happen here.
In the autumn last year, together with farmers and heads of our association we attended a perfect presentation at the American Embassy on the issue of income insurances in agriculture. On March 14 this year the idea was again discussed in the State Agriculture Fund. We should speak on this subject and we can finally reach to a good solution, Mladenka Varbanova, director of the general insurance sector of Lev Ins told the BANKER.
Her fellow insurer from Uniqa Dragan Draganov is not optimistic. I’m sceptical about that, we did attempts at introducing such policies for financial risks, but this proved unprofitable, he said.
Dancho Danchev, chairman of the board of the Association of Bulgarian Insurers said that the subject is certainly interesting, but refused to take part in discussing it.
Tsvetanov asked for a specific example. If the average income for the last five years of maize per hectare was 200 lev and in a certain year a farmer achieves only 120, the difference is 80 levs. In a contractual coverage of 60%, the lost income to be covered comes to 48 levs. Assuming roughly that the insurance premium is 10 levs, we suggest that 7.50 levsbe paid by the state and the remaining 2.50 levs – by the farmer, Tsvetanov added.
The BANKER
