“The Ministry of Agriculture of Russia has prepared significant changes to the conditions for granting preferential loans to crop growers. According to the published draft of the document, starting from next year, insurance of at least 50% of sown areas becomes a prerequisite for farms. In addition, for the first time, a requirement for crop insurance for farmers applying for preferential loan extension due to damage from natural disasters appears - it will be valid for farms affected in 2023. These changes can become a significant incentive and increase the demand of farmers for crop insurance, starting from the autumn sowing season,” said Korney Bizhdov, President of the National Union of Agricultural Insurers.
These requirements are contained in the draft resolution of the Government, which the Ministry of Agriculture of Russia published on July 10. The project provides for amendments to the relevant rules for granting subsidies from the federal budget.
According to the amendments, an insurance contract covering at least 50% of the area of agricultural crops on the farm should become a prerequisite for borrowers who attract preferential short-term loans for the development of the crop sub-sector: for the purchase of fuels and lubricants, chemical and biological plant protection products, fertilizers, growth regulators, seeds and planting material.
The same condition is also introduced for borrowers who suffered in 2023 as a result of a natural emergency and, in this regard, want to exercise their right to prolong a previously granted preferential short-term loan for up to 1 year.
“The changes were announced by Deputy Minister of Agriculture of Russia Elena Fastova at the last All-Russian Field Day. They are in line with the system of measures to stimulate the use of insurance coverage by agricultural producers, which the Ministry of Agriculture of Russia has been consistently implementing in recent years. In particular, last year measures were introduced in the form of a system of decreasing and increasing coefficients that take into account the presence of an insurance policy when calculating a number of subsidies, - said the President of the National Anti-Agency Association Korney Bizhdov. – NSA predicts an increase in demand from farmers for insurance support for their business. In turn, the insurance and banking communities must be prepared for this organizationally, methodologically, and financially. New measures continue to increase the role of insurance in ensuring the financial stability of agribusiness. In fact, the agricultural insurance system is gradually shifting the burden of the budget to compensate for the devastating impact of natural disasters on the agro-industrial complex.”
According to the NSA, as of June 1, 6,7 million hectares of crops were provided with insurance coverage within the framework of the agricultural insurance system with state support.