French experts on climate and risk management in agriculture have been working on a new insurance policy since fall of 2013. The current policy’s shortcomings were the subject of much complaint for failing to cover costs associated with repairing damages caused by more frequent occurrences of extreme weather. On July 10th, officials from the Ministry of Agriculture gathered alongside insurers and other professional organizations for a meeting on agricultural climate and risk management with the shared goal of laying the framework for this new national agricultural insurance. The same day, the French Ministry of Agriculture announced the creation of a new “baseline contract” available for all farmers and ranchers.
The objective of this new “baseline contract” is to offer compensation for production costs rather than for the farmer’s revenue. The indemnity would give them the opportunity to re-launch a production cycle after having faced losses due to catastrophes incurred by extreme weather. This new insurance policy will be affordable for most farmers and ranchers by virtue of reducing acre-based premiums.
In terms of funding, the state will shoulder a part of the “baseline contract”. If further coverage is needed, the farmer will be free to subscribe to a complementary insurance as he deems fit.
The French Minister of Agriculture, Stéphane Le Foll, wants to conduct a test period in order to explore the robustness and relevance of this new insurance policy, in particular regarding the diversity of French agriculture and its many sectors. The test period is expected to start promptly and will last a couple of months, ideally permitting insurance companies to offer this “baseline contract” by the end of 2015.
In 2013, the previous insurance policy had a budget of 77.2 million euros: €57.9 coming from the EU and €19.3 from the state. Additionally, the ceiling rate for insurance subsidies was 65% in every agricultural sector. According to recent figure, there was a total of 77,000 insurance contracts in 2011, 7% more than in 2010. This represented 29% of the agricultural acreage in France.