National Association of Agriculture Insurers

NAAI: the main risk for plant growing, drought, was realized in 2015

According to the preliminary data, the forecast made earlier by the National Association of Agricultural Insurers concerning the year 2015 proves right : this year is less favorable for plant growing than the previous two years considering natural perils. The main crop losses were caused by severe drought in a number of areas of the Volga territory and Siberia, where emergency was declared. This risk is included into the list established by the law and can be insured on the terms of state support.
Reported by the regions that the heaviest losses are recorded in the Republic of Tatarstan: the shortfall in wheat production of 1.5 million tons is estimated by the Ministry of Agriculture of the Republic as 9 - 10 billion rubles of July 29, and 9-10 billion more damage is caused by other crop failure .Thus, the total losses come to 18-20 billion rubles. In the Saratov Region dry wind and drought ruined crops of 599 farms on the area of 585 thousand hectares, the emergency was declared in 31 areas. The cost of crop failure is now estimated at 5.7 billion rubles, the direct cost is 2.4 billion rubles. The Deputies of the Saratov Region Duma filed a request with the Minister of Agriculture of the Russian Federation, Alexander Tkachyov , to accelerate the financial assistance in order to prevent the bankruptcy of the "considerable part of agricultural producers". In the Irkutsk Region, where about 110 thousand hectares were drought-stricken, the authorities claimed losses caused by drought of 2.3 billion rubles, according to expert estimations. In the Samara Region the state of emergency was declared in 12 municipal areas, experts estimate a loss at 1.5 billion rubles.
"Total farmer’s loss profit caused by drought this year, only according to the received data, already comes to 30 billion rubles, –comments Korney Bizhdov ,the president of NAAI. – Nonetheless, the year 2015, according to the latest forecasts of the Ministry of Agriculture of the Russian Federation, can become a banner year for the branch on the whole : the grain yield is expected more than 101 million tons in the Russian Federation in 2015. However, only farmers of unharmed regions will be beneficiaries, while in hit areas the losses will anyway affect the budget or exacerbate the financial position of farms. This situation shows the importance of agricultural insurance, which is the only instrument to prevent farms from bankruptcy allowing sharing risks between regions."
"According to the statistics of NAAI, risks connected with lack of sufficient moisture in the soil or the atmosphere is the main reason for insured events, –emphasizes the president of NAAI. – Since introduction of agricultural insurance with state support in Russia in 2012, they come to 60% of crop insurance payments made by members of NAAI. Totally in 2012-2014 NAAI companies paid 2.5 billion rubles to insured agrarians only for catastrophic crop failure caused by drought and dry winds. If the level of coverage had been larger, the NAAI payments would have been much higher. Obviously, the potential of the system needs to be increased."