Russia’s farmers can sow the seeds for record harvests. But the agricultural sector needs more investment. Therefore, a more robust insurance infrastructure should be developed.
In a report launched in Moscow on June 23, Swiss Re provides an overview of the development of Russian agriculture and discusses reasons for the low insurance penetration.
The report also publishes the findings of a survey of 250 larger farms in the country’s most important agricultural regions and proposes ways of developing a more robust agricultural insurance framework.
Insurance is an important stepping stone towards food security for the population and financial stability for the farmers. The farmers polled agreed that extreme weather, low output prices and high input costs are the most significant risks they face. But while their risk perception is high, they are loath to consider insurance because of high premium costs and inadequate claims settlements.
“Russian farmers need the full range of financial risk management tools including indemnity and index-based insurance”, says Reto J. Schneider, Head of Swiss Re’s Europe & Africa Agriculture unit. “Index-based solutions, especially, facilitate an impartial, fast and cost-effective loss settlement. Furthermore, with better financial risk management, farmers can use their funds for investing in infrastructure such as on-farm storage instead of covering losses”.
