The Pilot Agro-insurance Program is looking for every willing farmer
18 September, 2014
The Pilot Agro-insurance Program is looking for every willing farmer
The state-initiated pilot agro-insurance program began on September 1st and promises to embrace every willing farmer during its year-long existence. The program envisages state subsidies of 5 million GEL to be injected in the co-financing of premiums charged by agro-insurance packages sold by private insurance companies.

High risks in agriculture and similarly high prices of agro-insurance have held back the development of both agriculture and insurance sectors in Georgia. Until recently no state support was provided for Georgian farmers to
take out insurance packages. This new program puts national agriculture in competition particularly with Turkey, the top trade partner and exporter to Georgia, which enjoys a liberal trade regime with Georgia. The issue gets more serious especially now, when the free trade agreement with the EU enters into effect starting this fall and EU imports are expected to flood the country. It is a common knowledge that both the EU and Turkey provide huge state injections to agriculture and considerable portions are issued via agro-insurance.
Therefore the ongoing agro-insurance program is expected to be an icebreaker to raise awareness among Georgian farmers and ease their first steps by reducing insurance premium payments. The co-financing share fluctuates between 70-95% of the insurance premium rate and the cap limits of the state financing are 30 thousand GEL and 50 thousand GEL for a private farmer and a cooperative respectively. Five insurance companies GPI Holding, Aldagi BCI, IC Group, Cartu Group [affiliated with the ex-Prime Minister Bidzina Ivanishvili], and Irao participate in the program. However, the program is open to other companies if they decide to join it in future.
To find out more details of the pilot agro-insurance program Georgian Journal interviewed Mariana Morgoshia, Director of Agricultural Projects’ Management Agency for the Ministry of Agriculture.

– Ms. Mariana, what is the key benefit of the current pilot agro-insurance program?

– This state program provides insurance for four natural disasters such as frost, hail, excessive precipitations and storm. Co-financing of the insurance premium rate ranges between 70-95% and the co-financing portion will be depend on the insured crop. This is the key benefit we offer to farmers.

– But drought is a historical problem in Kakheti, east Georgia and this year a devastating drought exemplifies this problem. Do you not insure against droughts?

– No, we do not insu­re against drought. Dro­ught is a problem wo­r­ld­wide and most insu­rance companies cannot take the risk of drought insurance. This insurance is so expensive that even the co-financed premium rate would have been too expensive. Therefore many companies cannot afford this product.

– What are the selection criteria of the program beneficiaries?

– Any willing farmer who cultivates produce on which statistical information is available.

– Could you provide a list of the insured produce?

– This list is pretty large and is available on our website In brief, the list includes general crops, beans, vegetables, orchard varieties, berries, and nuts – all traditionally cultivated produce in Georgia.

– How will the co-financing rate be defined?

– First and foremost the co-financing rate will be defined according to the harvested produce. Details are provided on the chart on our website as I have mentioned. This chart is a guide for everyone who is interested in this insurance program. The chart includes the cap limit of insurance premiums, the co-financing rate paid by the state and the rate paid by the beneficiaries, as well as the standard price per kilo [of harvest]. So the interested person can calculate everything.

To make things clearer let’s take citrus as an example. The cap insurance limit for mandarin and lemon is 11%. 8% out of this is paid by our agency and a farmer pays from 0.5-3%. Insurance companies, however, may insure below the cap limit and offer 10% for example, which will cut down the farmer’s share to 2%. This space between 0.5% - 3% of the farmer’s share is left to create competition among insurance companies, which may reduce their price. On this purpose we set maximum limits and not a fixed limit. The maximum limit of an insurance premium ranges within 8-16% and insurance companies reimburse the loss, if it occurs, by 100% [the franchise cost is deducted].

– How willingly do farmers join the program? To my information they are still unaware of the program’s launch.

– The information campaign has just begun to start. We conduct visits in regions together with insurance companies and hold meetings to raise awareness. We already visited Ajara last week and we plan new visits this week. The TV provides coverage and new TV ads will be rolled out soon. We do our best to reach each farmer.

– This pilot program will last only one year. What do you plan after? Is the state expected to provide more permanent and large-scale support to Georgian farmers in order to enable them to be competitive?

– From the beginning we try to achieve maximal results through this pilot program. I intend to foster the insurance culture in the country. At the end of the year we will summarize the information and decide whether or not to go ahead and how. I cannot provide details of future aid format at the moment. What I can say now is that the state will continue to develop agriculture and help farmers stay on their feet. This is the first step and the next steps will be analyzed in a way as not to harm farmers and to offer only the best terms.

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