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"Risk and crisis management in agriculture"

The Commission Communication on risk and crisis management in agriculture looks at possible new measures to help farmers in the European Union manage risk and to provide an improved response to crises in the agricultural sector. Three options that refer to agricultural insurance, mutual funds and an income crisis tool are presented for discussion. In addition, specific training could also help farmers make better use of risk management instruments.

Recent reforms to the Common Agricultural Policy (CAP) encourage European farmers to be more market oriented. However, crises caused by natural disasters, livestock diseases or plant pests, or economic crises caused by the unexpected closure of important export markets, may endanger a farm's viability or even affect the economic stability of an entire rural area.

Farmers should have access to appropriate risk and crisis management strategies. The Communication identifies three options for encouraging the development of risk management tools at EU level and providing an improved response in the event of crisis:

  • Option 1 explores the possibility of contributing to the payment of premiums, where farmers take insurance against natural disasters, extreme weather conditions or disease. The role of reinsurance is also considered.
  • Option 2 encourages the development of mutual funds for agriculture, by granting temporary and degressive support for the funds' administration.
  • Option 3 puts forward the idea of new instruments to provide basic coverage in the event of income crises.

In presenting these options, the Commission's aim is to help farm businesses withstand temporary shocks and improve their access to finance for developing their activities. Any new measures would clearly not be intended to offer the kind of guarantees formerly provided by the CAP.

The purpose of the Communication is to launch a broad debate on risk and crisis management in the context of the reformed CAP. It fulfils the Commission's commitment to the Agricultural Council when CAP reform was agreed. The mandate was to examine two issues: how some of the funds generated by the new "modulation" mechanism might be used to finance risk, crisis and disaster measures in agriculture; and whether it was appropriate to include provision for crisis in each Common Market Organisation (CMO), as exists in the beef CMO. This latter option is rejected.

The Communication is accompanied by a Commission staff working document that describes the risks and crises agriculture is subject to and the management measures that currently exist.

(March 2005)

 

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"Communication from the Commission to the Council on risk and crisis management in agriculture" - COM(2005) 74 final [pdf]
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Commission Staff Working Document accompanying the Communication  on risk and crisis management in agriculture [pdf]
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See also:

Risk Management Tools for EU Agriculture with a special focus on insurance (Working document, 01/2001)


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