Krasnodar, 19 June.
Since the beginning of the spring, Kuban farmers have faced a series of troublesome weather surprises. The night frosts, wind erosion, drought and soil dehydration turned for the worse the forecasts for the future harvest. The situation also uncovered the following longstanding problem: the existing system of agricultural insurance in many respects cannot meet the demands of the agricultural sectors.
The field crops have reportedly perished on the area of 52,000 hectares. The losses of cereal crops are forecasted to be as high as 30 to 40%.
The orchards have also been affected by the night frosts. The losses of the gardening companies are assessed to reach 240 million roubles.
As for the agricultural insurance, the regional Ministry for Agriculture and Processing Industry informed us that Sad Gigant JSC was the only company to have concluded an insurance contract with governmental backup. The total acreage of the insured orchards is 1,569 hectares. The plantations were insured against droughts, frosts, hails and other dangerous natural phenomena, and against harmful organisms.
There is a serious problem for the gardeners in this respect: an insurance indemnity would be paid only if the trees perished. Of course, on one hand, both the frosts and the drought are considered an insured case, but, on the other hand, what they caused was the loss of the yield rather than the plants. This was why, according to the Union of Kuban Gardeners, the area of insured orchards in Krasnodar krai is only 1,800 hectares, whereas the total acreage of orchards in the region is 480,000 hectares. This is a negligible percent for the region that gives 50% of the national yield of apples.
“In this situation, we rely on timely support of the Russian Government that may prevent us from lowering the production volumes of fruits and saplings in the nearing years, and, correspondingly, from growing import volumes and prices for fruits,” Nikolai Shcherbakov, Director General of the Union of Kuban Gardeners, announced. Experts also believe that the insurance system for orchards should be more flexible. The producers should be given a chance to insure their assets on a quarterly basis and crop-wise, differentially depending upon the planting density and planned yield in the farm. So far, however, the gardeners are forced to insure their entire acreage, including the areas under buildings, auxiliary areas, and plantations that are not planned to bear fruit during the insured period. All these factors make the procedure of financial defence too costly and practically senseless.
Farmers specialised on winter crops also need some novelties in insurance policies. Say, 1.7 million hectares were sown with winter crops in Krasnodar krai last year – but only 73,700 hectares, or 4.3% of the acreage, were insured. It is lower than the national average, which is nearly 10.5%.
Another important point is the deductible – the part of the insurance claim to be paid by the insured. Of the 73,700 hectares of insured winter crops, 42,000 hectares, or over 50%, were insured subject to the minimum possible deductible which is 10%. It means that these farms chose the maximum possible coverage. However, 29,000 hectares were insured with the deductible equal to 50% – that is, with the least possible coverage of possible losses.
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