A reform of crop insurance, long awaited by the agricultural world, must be presented to the Council of Ministers on Wednesday, in order to change a system “out of breath”, in the midst of climate change.
The reform of crop insurance must be operational on January 1, 2023. (©Pixabay)
UA bill will lay down “the foundations” and “the main lines” of the new architecture desired by the government, it was specified to the Ministry of Agriculture. The different thresholds for triggering crop loss compensation, crop by crop, will be defined later by regulation or decree. The government wants its text to be adopted in Parliament before the end of the mandate, so that the crop insurance reform be operational on 1er January 2023.
” Finally ! “, says Joël Limouzin, in charge of the file at the majority agricultural union FNSEA. Drought, floods, frost… “When it hits, it hits hard,” continues the Vendée farmer, who grows cereals to feed his cows and pigs. “Agriculture alone cannot assume the climate risks which are becoming more and more recurrent and violent”, he continues, welcoming a reform which “is going in the right direction”. Calls to overhaul the system had become more pressing following the late frost last spring, which ravaged orchards and vines, with harvests cut in half in Burgundy and Champagne, according to professionals.
President Emmanuel Macron had outlined the reform of crop insurance at Terres de Jim, organized by the Young Farmers union in September “We want to create a system (…) to have the fastest possible response when we are hit by a agricultural calamity. “For the Minister of Agriculture, Julien Denormandie, it will be” the most structuring reform since the common agricultural policy (PAC), launched in 1962 and of which France remains the first beneficiary.
This week I am presenting the bill for the reform of our crop insurance system.
This new system will be simpler, more accessible and more regulated.
— Julien Denormandie (@J_Denormandie) November 28, 2021
Objective: massification of insurance
L’compensation for crop losses is currently based on the parallel – or even concurrent – operation of two regimes. The first, that of agricultural calamities, has existed since the 1960s. Co-financed by farmers and the State, it excludes certain sections of agriculture (viticulture and field crops) and its deadlines are considered too slow.
The second is the private insurance system but 65% subsidized by the State, in deficit and still little subscribed by farmers (about 18% all crops combined, according to the ministry). The planned architecture, resulting in particular from the work of the deputy of the majority Frédéric Descrozaille, has three levels. At the first level, farmers bear the smallest losses (up to 20%) out of their own funds. Then the insurers intervene, up to a threshold to be defined, and finally the public funds to compensate the claims “of exceptional magnitude”. A one-stop shop has been created to simplify procedures.
“The uninsured less well compensated”
Farmers are strongly encouraged to take out insurance: even in the event of heavy losses, the uninsured will be much less well compensated than the others. “For us, this is not tolerable,” says Denis Perreau, national secretary of the Confédération paysanne. Supporter of a reform, the union rejects the one that is emerging, judging that it will leave a large number of farms without compensation in the long term and that it gives too much power to insurers. “I doubt that they work for the beautiful eyes of the peasants…”, adds Mr. Perreau, grain farmer and sheep breeder in Côte-d’Or, himself endowed with insurance “which shows its limits” in the face of to the repeated droughts.
The ministry aims for around half of crops to be insured by 2030. “It’s a reform that is really of high quality,” said Pascal Viné, director of institutional relations at AFP. Groupamawhich is shared with Credit Agricole Insurance three quarters of the crop insurance market. The text provides for the creation of a pool of insurers. Adhering to it would be mandatory for insurers in the sector, thus allowing data sharing, risk pooling, to establish the fairest possible insurance premium.
Facing theincrease in the frequency and intensity of climatic disasters, crop insurance is currently making insurers lose money, they point out. According to Delphine Ltendart, insurance director of Groupama, “since 2016, we have not found a profitable year. (…) Every year is either a bad year or a very bad year”.
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