Ministry of Agriculture and NAAI focus on emergency assistance to agricultural producers
In 2014 the Russian Federation had the lowest frequency of emergency situations in 3 years in agriculture. The data were given by the Ministry of Agriculture of the Russian Federation at a meeting on agricultural industry perfomance in 2015, in which Korney Bizhdov, the president of the National Association of Agricultural Insurers, took part.
The meeting took place on January 21, 2014 under the chairmanship of the Deputy Minister of Agriculture of the Russian Federation Dmitry Yuryev. Preliminary results of development of plant growing and livestock farming in 2014, financial condition of the enterprises and the producer’s needs of state funding, including credit resources and agricultural insurance subsidies became its main subjects. At the meeting reports of heads of key Ministry Departments were heard: by A. Kutsenko (Department of Economics and State Support of Agroindustrial Complex), V. Labinov (Department of Livestock Farming and Breeding), M. Orlov (Department for Regulation of the Agrofood Market, Fisheries, Food and Processing Industry), N. Smirnov (Financial and Budgetary Policy Department), P. Chekmarev (Department of Plant-Growing, Chemicalization and Plant Protection).
The ministry prepared a detailed analysis of losses from natural disasters in 2014, which was favorable for agriculture of the Russian Federation. According to the data provided to the participants of the meeting, in 2014 the status of emergency because of bad weather conditions was introduced in 9 territorial entities of the Russian Federation, 7 of which had crop losses. For reference, there were 16 such regions in 2013, 20- in 2012. The total area of crop losses was 1.204 million hectares in 2014; more than 2.2 thousand farms were hit. The damage caused to agricultural producers assessed on uncompensated expenses exceeded 3.7 billion rubles. The status of emergency in agriculture in 2014 was declared in Altai Republic and Altai Territory, the Republics of Khakassia and Tyva, Republic of Tatarstan, the Orenburg, Rostov, Magadan and Kurgan areas.
"The fact that, the Ministry of Agriculture of the Russian Federation focused on losses of agricultural producers because of emergency while analyzing the need of branch in financial resources, shows systematic approach of the ministry, – Korney Bizhdov ,the president of NAAI, comments. – In return, insurers draw attention to the fact that emergency situation had extremely uneven impact on agricultural insurance in certain areas. According to the data of NAAI companies for December 1, plant growing losses were claimed by farms in the Republic of Tatarstan and the Orenburg Region while in other emergency areas agricultural insurance is underdeveloped or does not exist at all."
"According to NAAI, some of areas including emergency ones, in 2014 didn't develop agricultural insurance, pleading impossibility of co-funding in financial target for the government assistance program of agricultural insurance by the regional budget, – K. Bizhdov ,the president of NAAI, explains. – In this regard the possibility of zero co-funding of government-subsided agricultural insurance programs by regions was discussed at the meeting on January 21. It means that, in case a region doesn’t have its own funds, insurance will be subsided by the state within available matching funds for this certain region of the RF provided by the Ministry of Agriculture of the Russian Federation. On the one hand, it will, to some extent, solve the problem of affordability of agricultural insurance for growers in a number of regions; on the other hand it can reduce agricultural insurance subsidies. NAAI considers that responsibility of the region for development of agricultural insurance and availability of state-supported insurance for farmers must be taken into account when granting, for example, the inter-budget transfers to regions to support agricultural enterprises after emergency".
The regulations of inter-budget transfers from the federal budget to territorial entities of the Russian Federation on loss assistance in the case of natural perils to agricultural producers were approved by the Government of the Russian Federation on December 22, 2014. According to this document, the procedure for natural perils damage assessment is established by the Ministry of Agriculture of the Russian Federation, and transfers will be provided in terms of agreements between the Ministry of Agriculture of the Russian Federation and the supreme government organ of the territorial entity of the Russian Federation.
The National Association of Agricultural Insurers was founded in 2007 with active support from the Ministry of Agriculture of the Russian Federation, Ministry of Finance of the Russian Federation, Federal Service of Insurance Supervision and the All-Russian Insurance Association. The Association provided for the consolidation of crop insurance development activities of federal and regional companies, interested in improvement of agricultural insurance, and became the centre of development of modern government-sponsored agricultural insurance, meeting the interests of both agricultural producers and insurers.
So far 23 insurance companies have joined the Association. The overall charter capital of NAAI members makes about 70 billion rubles, total own assets about 150 billion rubles.