So far, more than 51,000 hectares have been reported to the Rural Support Service as affected or not sown due to frost and heavy rains, amounting to about EUR 63 million in losses, Latvian Radio reported on 18 July.
Preliminary estimates show that frosts and rains this season have so far caused losses to farmers of around €63 million. At the same time, farmers point out that the degree of damage varies, and that in some places it is still wet and they cannot go into the field, but may be able to do so later.
There have been discussions in previous years about setting up a risk fund to which farmers would contribute with a regular payment to cover natural disasters and other losses, but the industry could not agree on the financing of such a fund last year.
Now Juris Lazdiņš, Chairman of the Board of the Farmers’ Saeima, concludes that the possibility of making it compulsory for farmers to insure against basic risks should be considered. Over the last three years, more than €100 million has been paid out to farmers in aid for weather damage, and he believes that farmers will not be able to accumulate such a basic risk fund easily on their own.
“We could introduce compulsory insurance for summer risks, for the minimum package offered by insurers, and it would be equivalent, like a contribution per hectare. We already have an existing insurance system here that works, that has its own conditions, so we would not need to create anything new,” Lazdiņš explained.
He drew parallels with the introduction of compulsory insurance for vehicles – there was controversy then too, but now most are happy. “I think we could propose the same step in agriculture,” Lazdiņš added.
Jānis Abāšins, President of the Latvian Insurers’ Association, admitted that previous discussions with the industry on compulsory insurance had pointed to legal obstacles.
“There was a legal hitch, at least the Ministry of Agriculture said so, why it could not be done some time ago. If it could be done now – made compulsory – then we as an industry would certainly be prepared to look at that option,” confirmed Abāšins.
“It would definitely increase the amount of insured areas and the number of insured farmers. And it is very likely that at some point it could also influence the price of insurance to the low side. On the other hand, it all depends on the changes in Latvia’s climate and the frequency of natural disasters,” Abāšins added.
The deadline for submitting damage applications to the Rural Support Service has been extended until the end of July. A discussion on possible compulsory insurance could take place in the autumn.
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