Crop Insurance Today November 2017 - 20

or flood. Drought coverage is triggered by the
Climatic Water Balance falling below a specified
level for each crop/soil type combination, but
is viewed as too expensive by farmers. Cereals,
rapeseed, and maize are the primary crops insured, with hail, winterkill, and spring frost the
most frequently insured perils. Losses for winterkill and spring frost vary widely from year to year,
and can greatly exceed losses due to hail. The introduction of Western European high-yield crop
varieties, which are not well adapted to Poland's
climate, has contributed to increased claims.

A panel of distinguished guests at the 34th AIAG Congress.

Representing the United States were Mr. Robert Johansson, Chief Economist of the United
States Department of Agriculture (USDA), who
presented "Agricultural Development - Global
and in the U.S.," and Tom Zacharias, President
of NCIS and Vice President of AIAG, who discussed, "Outlook on Crop and Revenue Insurance in the U.S."
The remaining presentations fell into three
broad categories: the impact of climate change
on crop insurance and livestock disease; the
use of big data and the internet of things (IoT)
in crop insurance; and, overviews of crop insurance in Poland, China, France, Russia, and South
America.

Overview of Crop Insurance
in Poland

Several presentations combined to provide an
in-depth understanding of the Polish agriculture
sector: key production and ownership statistics,
how the insurance system functions, and what
farmers expect from agricultural insurance as
well as barriers to market development.

Polish Agriculture - Key Notes
of Development
Professor Sebastian Stepien noted that Polish farms are small compared to those in other
countries, employ a much larger share of the
workforce, and have much lower productivity
at roughly 30 percent of farms in the European
Union. Of the 1.4 million farms in Poland, more
than one million are 10 hectares (approximately
25 acres) or less, while only one percent of farms
have an area of 50 hectares or more. These larger
units represent 30 percent of the total farmland
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in Poland, versus 80 to 90 percent in Western Europe. While there has been a slow trend towards
larger, more efficient farms, the EU's Common
Agricultural Policy, a form of direct payments
to farmers which represents 50 percent of farm
income, has prolonged continued fragmentation
of the sector by propping up small, less efficient
operations. While agricultural employment remains relatively large, farming is the primary
source of income for only 25 percent of farmers.
Agriculture contributes 2.6 percent of Poland's
GDP while employing 12 percent of the workforce, both down considerably from the end of
Socialist era in 1990. Poland is a net exporter of
food products, with a positive trade balance in
2016 of 7.1 billion Euros.

Polish Subsidized System of
Agricultural Insurance
Krzysztof Lyskawa, PhD, related that Polish
farmers developed a negative attitude towards
the country's system of compulsory crop insurance under communism, seeing it as just another
tax to be avoided rather than a risk management
tool. Although drastic changes have been made
to the Polish crop insurance system to comply
with EU regulations, farmers' poor perception
of crop insurance persists. Education and subsidized crop insurance are viewed as the solution,
with subsidy levels now at 65 percent of premium for the following perils: winterkill, spring
frost, hail, drought, flood, hurricane, torrential
rain, lightning, avalanche, and landslide. Due to
poor farmer participation, the government now
requires farmers to insure at least 50 percent of
their acreage against at least one of the following risks: hail, spring frost, winterkill, drought,

Agricultural Insurance System
- Farmer's Expectations and
Barriers of Development
The Polish farmers' perspective was provided
by Wiktor Szmulewicz, President of the National
Council of Agricultural Chambers. Farmers are
more concerned about variation in revenue at the
whole farm level due to natural disasters rather
than price declines. A significant concern is that,
although droughts are becoming more prevalent, little insurance coverage is available as insurers are concerned about accumulation of risk.
Farmers are selective in which crops to insure,
with more than 80 percent market penetration
for rapeseed and hops and 49 percent for tobacco, but much lower levels for other crops where
rates are high or risks are perceived to be low. To
encourage participation, the government has increased the amount of funds available to provide
premium subsidies, but frequent changes to the
program, limitations on payments, and inconsistencies in loss adjustment procedures have been
issues. Finally, it was noted that larger operations
see a greater need for crop insurance with nearly
50 percent purchasing coverage. However, awareness is low for most farmers with only 17 percent
of the smallest farms covered.

Impact of Climate Change
on Crop Insurance

Among the issues discussed during the Congress were the implications of climate change for
crop insurance and livestock disease, the effect of
El Niño / La Niña on agricultural risks, and winterkill modeling using weather data.

Livestock Disease
Nadav Galon, former Chief Veterinary Officer of Israel, described the impact of climate
change and geopolitics on livestock disease and
insurance. The existence of modern, intensive

Table of Contents for the Digital Edition of Crop Insurance Today November 2017