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.