The Ministry of Agriculture of the Russian Federation: activity and initiative of farm households increased in the sphere of agricultural insurance

The situation in the sphere of agricultural insurance is constantly controlled by the Ministry of Agriculture of the Russian Federation.

Agricultural insurance, carried out with the state support, takes a certain niche on the insurance market of the Russian Federation. It is a system of economic and administrative measures to protect property interests of agricultural producers, which is connected with the necessity to provide insurance coverage against risks of loss of agricultural products manufactured by agricultural producers.

Owing to the activity of the Ministry of Agriculture of the Russian Federation, there has been a considerable increase in the sphere of agricultural insurance.

Thus, in 2014 526 farm households concluded contracts of agricultural insurance with the state support in the sphere of cattle breeding, which is by 41.8% more than it was in 2013. The number of farm households and businessmen, who concluded the contracts, 2.5 times increased, their share was 18.4% of all households concluded the contracts.

The number of insured animals increased from 1,729,000 heads in 2013 to 4,303,000 heads in 2014. The growth rate was 148.9%, where 35,000 heads were insured by farm households and sole proprietorships, which was 2.7 times more than it was in 2013.

There is also a positive dynamics in the insurance of harvest. According to the data of the AIC administrative bodies of the Russian Federation constituent entities, in 2014 62 regions and 44 insurance companies participated in the program on harvest insuring with the state support. 5,827 households concluded contracts on agricultural insurance, which was by 24.9% more than it was in 2013, where almost a half (2,385 contracts) was concluded by farm households and sole proprietorships. In comparison with 2013 there was an increase of 21.6%.

In 2014 the sowing area of farm households and sole proprietorships was 25.1% of the total area of the country.

The sowing area according to insurance contracts with the state support taken for subsidization in 2014 was 12.8 million ha, which was by 9.8% more than in 2013. The area insured by farm households and sole proprietorships was 1.9 million ha, which was by 5.5% more than in 2013.

With the aim to raise the interest of agricultural producers to conclude contracts on agricultural insurance, in 2014 some amendments were introduced into Federal Law №260-ФЗ dated by July 25 2011 “State support in the sphere of agricultural insurance”:

from 2015 insurance payments will be made at the decrease of agricultural harvest by 25% and at the perennial plants’ viability loss on the territory of over 30% from lands;

from 2016 the threshold reduction of the harvest loss, including the harvest of perennial plants, is planned to be made by 20% and more; creation of the unified All-Russia Insurance Association;

from 2018 maximum rates including natural and climatic conditions for growing of agricultural crops are planned to be used at the definition of maximum rates for calculation of state subsidies; the efficiency increase of independent expertise owing to the extension of scope of independent experts’ work; introduction of an arbitrator and mediation, which allows to regulate disputes connected with the agricultural insurance contracts under a pre-action protocol.