Ukraine - Information on Crop Insurance in Spring-Autumn 2011

23.02.2012
Download file with graphs >>> Throughout spring-summer 2011, the insurance companies signed 1,981 crop insurance contracts (750 contracts in 2010). Our database does not distinguish between the types of contracts for spring-autumn as these contracts were less standardised than the contracts providing coverage for the winter season.  Normally, the insurers allowed producers to select a limited coverage (i.e. selected perils). This reduces the cost of insurance, especially if the client wishes to insure only against some predetermined risks. Throughout spring-autumn 2011, 540,000 hectares were insured (340,000 in 2010). The total sum insured was nearly UAH 3.2 b. (UAH 1.6 b. in 2010). The total premiums amounted to UAH 108 million (UAH 57.7 million in 210). The average premium rate was 3.38%, i.e. somewhat lower than in 2010 (3.59%). The forward grain purchase programme of the KhlibInvestBud Company in the grain market was the major factor contributing to the development of agri-insurance. All producers participating in the programme had to insure the yield with one of the three accredited companies (ASKA, Brokbuisness or Providna). Consequently, these three companies collected over 47% of all premiums in the market in spring-autumn 2011 and insured 264,000 hectares, e.g. 49% of the total acreage insured in the 2011 season.  The average insurance rates of these companies were at the level of the market average rate. That may be seen as an indicator that KhlibInvestBud required the producers to have real insurance coverage (which is often not the case when crops are insured as collateral). According to the insurance companies, the average premium rate on bank pledged crops insured in spring-autumn 2011 was only 1.29%. The insurance companies could not provide the indemnity data for the time when the data was requested, i.e. the database does not include the indemnity and loss data. These data will be collected at later stages along with the data on winter crops insured during autumn 2012. Crop data The producers preferred to insure winter wheat (1,091 contracts), sugar beets (234 contracts), corn (192 contracts) and winter rye (122 contracts). Fruit trees and grapes were not covered at all.  It should be noted that horticulture insurance is virtually nonexistent in Ukraine. In spring 2011, very few producers purchased vegetable coverage at the rates significantly lower than the average agri-insurance rates in Ukraine. The insured acreage under winter wheat was 284,000 hectares. The producers paid over UAH 44 million under the contracts insuring winter wheat for the summer season. The corn insurance contracts covered some 69,500 hectares and provided for the premiums worth UAH 19.3 million Sugar beets were insured on 55,800 hectares and the producers collected UAH 26.8 million of premiums. The insured acreage under sunflowers was 40,000 hectares (only UAH 4.7 million collected).

The key agri-insurance data are given in the table below.

Table: Crop insurance data by crop

Crop

Contracts

Including, collateral agreements

Acreage, hectares

Insured sum, UAH

Premiums, UAH

Winter wheat

1,091

42

284,156

1,431,197,640

44,356,435

Winter barley

39

9

9,136

21,520,785

348,608

Winter rye

122

1

13,317

38,726,205

1,430,316

Winter triticale

2

2

380

1,368,360

13,478

Winter rapeseed

31

15

12,060

65,866,904

1,011,434

Wheat

6

0

1,890

9,335,331

154,280

Barley

88

1

21,078

64,027,285

3,359,356

Rye

1

0

9,854

30,765,013

1,155,223

Sugar beets

234

3

55,845

735,329,840

26,803,363

Sunflower

98

5

40,137

161,813,125

4,749,494

Rapeseed

2

0

254

1,168,146

165,877

Bea

1

0

32

70,144

905

Soya

54

1

19,615

84,895,368

3,928,492

Vegetables

1

0

11

512,050

8,193

Corn

192

4

69,490

495,640,697

19,339,792

Spring mustard

2

0

627

526,879

23,595

Tomatoes

1

0

663

18,332,454

696,633

Chick pea

2

0

22

125,104

2,551

Buck wheat

13

0

1,140

31,855,050

318,124

Rice

1

0

352

6,588,000

197,640

Total

1,981

83

540,057

3,199,664,378

108,063,789

The average premium rate for winter wheat was 3.1%. Sugar beets were insured at 3.65%, corn – at 3.9% and sunflowers – at 2.94%.  The rapeseed insurance was most expensive – the average rate for two contracts was 14.2%, however it is hardly indicative due to the low number of contacts. In spring 2011, the tomato insurance was most expensive (UAH 1,051 per hectare). It was expensive to insure rapeseed (UAH 653/hectare), rice (UAH 561/hectare) and sugar beets (UAH 480/hectare). Other key features per crop are given in the table below.

Table: Average premium rates, average insured sums, indemnities and average rates per crop

Crop

Average premium rate

Acreage hectares per contracts

Premium total, UAH per contract

Premium sum,

UAH per hectare

Insured sum per hectare

Winter wheat

3.10%

                      260

40,657

156

5,037

Winter barley

1.62%

                      234

8,939

38

2,356

Winter rye

3.69%

                      109

11,724

107

2,908

Winter triticale

0.99%

                      190

6,739

35

3,600

Winter rapeseed

1.54%

                      389

32,627

84

5,462

Wheat

1.65%

                      315

25,713

82

4,939

Barley

5.25%

                      240

38,174

159

3,038

Rye

3.75%

                  9,854

1,155,223

117

3,122

Sugar beets

3.65%

                      239

114,544

480

13,167

Sunflower

2.94%

                      410

48,464

118

4,032

Rapeseed

14.20%

                      127

82,938

653

4,599

Bea

1.29%

                        32

905

28

2,192

Soya

4.63%

                      363

72,750

200

4,328

Vegetables

1.60%

                        11

8,193

745

46,550

Corn

3.90%

                      362

100,728

278

7,133

Spring mustard

4.48%

                      314

11,798

38

840

Tomatoes

3.80%

                      663

696,633

1051

27,660

Chick pea

2.04%

                        11

1,276

116

5,687

Buck wheat

1.00%

                        88

24,471

279

27,952

Rice

3.00%

                      352

197,640

561

18,716

Average

3.38%

                      273

54,550

200

5,925

Data by region The oblast of Poltava was the leader by the number of contracts sold in spring-autumn 2011.  Three hundred eighty two contracts were signed in Poltava oblast. The insured acreage was 96,000 hectares. The total premium amounted to UAH 34 million or 32% of the total agri-insurance premiums in Ukraine. In these oblasts the producers of sugar beets, sunflowers and corn were most likely to insure. By number of contracts, the leaders are the oblasts of Khmel’nytsk (158 contracts), Vinnytsya (146 contracts), Odessa (103 contracts), and Zhytomyr (102 contracts). In all other oblasts the number of contracts per oblast never exceeded 100. In addition to Poltava oblast, the largest insured acreages were in the oblasts of Vinnytsya (46,800 hectares), Khmel’nytsk (37,200 hectares), Kherson (36,600 hectares) and Sumy (30,600 hectares). The highest premiums were collected in the oblasts of Khmel’nytsk (UAH 11.6 million), Vinnytsya (UAH 6.9 million), Kirovograd (UAH 4.5 million) and Zhytomyr (UAH 4.5 million).

Table: agri-insurance by oblast

Oblast

Contracts

Total acreage, hectares

Sum insured, UAH

Premiums, UAH

Crimea Autonomous Republic

57

16,530

62,490,177

2,094,670

Vinnytsya

146

46,811

395,480,909

6,880,688

Volyn

32

6,314

35,441,029

950,265

Dniepropetrovsk

76

22,873

75,646,089

1,864,920

Donetsk

60

12,224

51,997,934

1,477,373

Zhytomyr

102

18,440

109,738,929

4,467,712

Zakarpattya

5

700

5,626,795

422,145

Zaporizhzhya

26

10,965

51,435,588

1,542,322

Ivano-Frankivsk

24

4,249

28,764,906

1,075,829

Kyiv

89

15,349

96,631,725

3,349,294

Kirovograd

84

29,083

144,442,608

4,500,355

Lugansk

64

13,535

41,212,761

1,155,739

Lviv

37

22,656

114,083,087

3,745,327

Mykolaiv

82

15,485

87,389,454

3,587,329

Odessa

103

19,773

139,691,985

2,558,958

Poltava

382

96,056

749,965,702

34,164,297

Rivne

34

14,497

101,459,633

2,033,981

Sumy

84

30,645

136,901,330

3,126,327

Ternopil

68

15,883

94,081,477

3,238,702

Kharkiv

73

20,608

105,712,615

3,942,607

Kherson

56

36,576

128,827,595

4,123,570

Khmel’nytsk

158

37,320

260,929,735

11,627,662

Cherkassy

54

14,957

89,768,606

2,459,782

Chernivtsi

12

1,759

6,174,076

251,604

Chernigiv

73

16,771

85,769,635

3,422,333

Total

1,981

540,057

3,199,664,378

108,063,789

 The average premium rate throughout 2011 spring-autumn was 3.38%. At the same time, only in four oblasts the average rate per oblast was over 4%. Thus in Zhytomyr oblast the average rate was 4.07% (4.1% in Mykolaiv oblast, 4,56% in Poltava oblast and 4.46% in Khmal’nytsk oblast). The lowest rates were applied in the oblasts of Vinnytsya (1.74%), Odesa (1.83%) and Rivne (2%).

The average contract insured 273 hectares. The average premium per acreage unit (hectare) was UAH 200. The lowest average premiums were paid in the oblasts of Dniepropetrovsk (UAH 82) and Lugansk (UAH 85). Agri-insurance was most costly in the oblasts of Poltava (UAH 356) and Khmel’nytsk (UAH 312). The table below illustrates the other major indicators.

Table: Agri-insurance by oblast

Oblast

Average premium rate

Acreage, hectares per contract

Premium per contract, UAH

Premium per acreage unit, UAH/hectare

Crimea Autonomous Republic

3.35%

290

36749

127

Vinnytsya

1.74%

321

47128

147

Volyn

2.68%

197

29696

151

Dniepropetrovsk

2.47%

301

24538

82

Donetsk

2.84%

204

24623

121

Zhytomyr

4.07%

181

43801

242

Zakarpattya

7.50%

140

84429

603

Zaporizhzhya

3.00%

422

59320

141

Ivano-Frankivsk

3.74%

177

44826

253

Kyiv

3.47%

172

37633

218

Kirovograd

3.12%

346

53576

155

Lugansk

2.80%

211

18058

85

Lviv

3.28%

612

101225

165

Mykolaiv

4.10%

189

43748

232

Odessa

1.83%

192

24844

129

Poltava

4.56%

251

89435

356

Rivne

2.00%

426

59823

140

Sumy

2.28%

365

37218

102

Ternopil

3.44%

234

47628

204

Kharkiv

3.73%

282

54008

191

Kherson

3.20%

653

73635

113

Khmel’nytsk

4.46%

236

73593

312

Cherkassy

2.74%

277

45552

164

Chernivtsi

4.08%

147

20967

143

Chernigiv

3.99%

230

46881

204

Average

3.38%

273

54550

200

Data by insurers According to the data provided by the insurance companies, 13 companies insured crops and perennial plantings in spring-summer 2010. The companies UESK and HDI did not provide agri-insurance in this season. Based on the available data, the insurers can be divided into three groups by number of contracts sold.  It is an important indicator of market penetration, in particular at the regional level. As a risk management tool agri-insurance is more important for small and medium producers than for big producers and agro-holdings. Some insurers that signed few contracts yet collected considerable premium amounts are included in the second group. The first group consists of the leader companies: Providna, UASK, Brokbusiness and PZU –Ukraine. Each of these companies sold over 100 contracts during the season. The company Providna signed 868 contracts (44%) to insure crops on 177,000 hectares (33% of the total acreage insured in spring-autumn 2011). The company became the leader, to a large extent, due to the participation in the KhlibInvestBud grain purchase programme. The sales volumes and acreage insured by the Providna company were nearly twice as high as those of the two other leading companies (Brokbusiness and UASK). The UASK company rates next to Providna for all major indicators except the level of premiums collected. UASK sold 470 contracts (24% of the market) to insure 106,600 hectares (20%). At the same time, this company collected the highest amount of premium – UAH 45 million or 42% of the gross premium in the sector for the season. The company Brokbuisness signed 313 contracts (16%). The company is rated third for all other indicators. It collected UAH 15 million (14%) and insured crops on 75,000 hectares (14%). The company PZU-Ukraine is in the first group. This company did not participate in the KhlibInvestBud programme, however sold 114 contracts (6% of all contracts in this season).  The company insured over 38,000 hectares (7%). The first group does not include the companies ING0-Ukraine and UNICA. Both sold few contracts (43 and 16 respectively). At the same time, both companies collected significant premiums - UAH 2.9 million (ING)-Ukraine) and UAH 4.9 million (UNICA). INGO-Ukraine insured 55,000 hectares (10% of the total insured acreage). Yet we did not include this company into the leader group for the very low average portfolio rate (0.7%).  The Company UNICA is in the second group for few contracts sold. The second group consists of the following companies: INGO-Ukraine, TAS, Oranta, ASKA and UNICA. All these companies, except UNICA, sold over 30 contracts each. The company ASKA sold 53 contracts, more than any other company in this group. This company participated in the KhlibInvestBud grain purchase programme. The Company UNICA collected UAH 4.9 million, more than any other company in the group. This company seems to prefer to insure big producers and agricultural holdings. Similar tendencies were observed with regard to the winter crop insurance in autumn 2010. The Company INGO-Ukraine insured 55,000 hectares, more than any other company in this group. The third group consists of the companies that throughout 2011 spring –summer sold less than 20 contracts each: ASKO-DS, UPSK, Oranta-Sich and Universl’na.  Each of these companies insured no less than 10,000 hectares. It is important to notice that three companies in this group applied the average rate less than 1%. The company Universl’na is the only exception (7.08%), however the volume of sales of this company was very modest.

Table: the insurers’ shares by a range of indicators

Contracts, %

Total sum insured for the group,%

Premiums collected, %

Acreage insured, %

Premium rate per group

Market leaders

89

74

74

73

4.05%

Group II

10

23

24

25

1.54%

Group III

1

2

2

2

0.48%

In spring-autumn 2011, the average premium rate in this market was 3.38 %. This average rate was calculated by dividing the total premium collected by the sum insured. The mean value of the premium rate by company was 2.57%. Importantly, in the leader group the average rate for all (except one) companies was over 3%. PZU-Ukraine was the only exception with the average portfolio rate at 2.04%. The companies in the second group applied very different rates. For instance, the average rate for the ASKA was 3.55%, 2.99% for UNICA, 2.58% for Oranta and under 2% for the two other companies. In the third group all companies except Universl’na applied the average rate lower than 1%. These companies concentrated primarily on insuring collaterised crops or insured crops against one or very few specific risks. The major agri-insurance indicators by company are given in the table below.

Table: Aggregated data by insurance provider for spring-autumn 2011

Company

Contracts

Sum insured, UAH

Premiums, UAH

Total acreage, hectares

Average premium rate

ASKA-DS

7

              9,538,566

                      83,026

                  2,100

0.87%

INGO-Ukraine

43

           409,696,116

                      2,853,931

               55,277

0.70%

UPSK

16

                 65,786,531

                          267,147

                       8,507

0.41%

TAS

41

              86,421,252

                    958,933

                    14,711

1.11%

Провидна

868

               925,779,689

                    34,205,405

                  176,851

3.69%

Providna

37

                 38,876,620

                      1,003,521

                    14,742

2.58%

Oranta-Sich

2

                    2,353,680

                               3,530

                       1,791

0.15%

PZU-Ukraine

114

                 82,566,626

                      1,686,214

                    38,145

2.04%

UASK

470

               891,295,214

                    45,174,815

                  106,370

5.07%

Universal’na

1

250,290

17,720

                    103

7.08%

ASKA

53

                 53,659,849

                      1,902,554

                    12,069

3.55%

Brokbusiness

313

               471,092,650

                    15,044,727

                    74,755

3.19%

UNICA

16

               162,347,296

                      4,862,266

                    34,635

2.99%

Total

               1,981

           3,199,664,378

                  108,063,789

                  540,057

We could not estimate the loss ratios for spring-autumn 2011 as the insurers were not be able to submit the relevant data before the end of the year. We are planning to collect the loss data and finalise this document in the first quarter of 2012. Agri-Insurance Development Project, IFC
18.10.2019

Malta - Vegetable production dropped 7% in 2018

Last year, Malta’s local vegetable produce dropped by 7% when compared to the previous year. The total vegetables produced in tonnes amounted to 58,178, down by 7% when compared to 2017. Their value too diminished as the total produce was valued at €30 million, down by 13% over the previous year. The most significant drop was in potatoes, down by 27% over the previous year. Tomatoes and onions were the only vegetables to have increased in volume, by 3% and 4% respectively but their value diminished by 9% and 24% respectively. The figures were published by the National Statistics Office on the event of World Food Day 2019, which will be celebrated on Wednesday. Cauliflower, cabbage and lettuce produce dropped by 10%, 3%, and 12% respectively. In the realm of local fruit, a drop of produce was registered here too apart from strawberries, which experienced a whopping increase of 58% over 2017. Total fruit produced in 2018 amounted to 13,057 tonnes, down by 1% when compared to 2017. The total produce was valued at €10 million, a 3% increase in value. Peaches produced were down by 35% and the 376 tonnes of peaches cultivated amounted to €0.5 million in value. Orange produce dropped by 10% and lemon produce dropped by 14%. There was no change in the amount of grapes produced and the 3,642 tonnes of grapes produced in 2018 were valued at €2.3 million. 70% of fruit and vegetables consumed in Malta is imported. The drop in local produce could be the result of deleterious or unsuitable weather patterns. Source - https://www.freshplaza.com

07.10.2019

USA - Greenhouse tomato production spans most states

While Florida and California accounted for 76 percent of U.S. production of field-grown tomatoes in 2016, greenhouse production and use of other protected-culture technologies help extend the growing season and make production feasible in a wider variety of geographic locations. Some greenhouse production is clustered in traditional field-grown-tomato-producing States like California. However, high concentrations of greenhouses are also located in Nebraska, Minnesota, New York, and other States that are not traditional market leaders. Among the benefits that greenhouse tomato producers can realize are greater market access both in the off-season and in northern retail produce markets, better product consistency, and improved yields. These benefits make greenhouse tomato production an increasingly attractive alternative to field production despite higher production costs. In addition to domestic production, a significant share of U.S. consumption of greenhouse tomatoes is satisfied by imports. In 2004, U.S., Mexican, and Canadian growers each contributed about 300 million pounds of greenhouse tomatoes annually to the U.S. fresh tomato market. Since then, Mexico’s share of the greenhouse tomato market has grown sharply, accounting for almost 84 percent (1.8 billion pounds) of the greenhouse volume coming into the U.S. market. Source - https://www.freshplaza.com

03.10.2019

World cherry production will decrease to 3.6 million tons

According to information from the USDA for the 2019-2020 season, world cherry production is expected to decrease slightly and amount to 3.6 million tons. This decline is due to the damages that the weather caused on cherry crops in the European Union. Even though Chile is expected to achieve a record export, world trade in cherries is expected to drop to 454,000 tons, based on lower shipments from Uzbekistan and the US. Turkey Turkey's production is expected to increase to 865,000. As a result of the strong export demand, producers continue to invest and improve their orchards, switching to high yield varieties and gradually expanding the surface for sweet cherries. More supplies are expected to increase exports to a record 78,000 tons, continuing its long upward trend. Chile Chile's production is forecast to increase from 30,000 tons to 231,000 as they have a larger area of mature trees. Between 2009/10 and 2018/19, the crop area has almost tripled, a trend that is expected to continue. The country is expected to export up to 205,000 tons in higher supplies. The percentage of exports destined for China has increased from 13 to almost 90% since 2009/10. China China's production is expected to increase by up to 24% and to amount to 420,000 tons, due to the recovery of the orchards that were damaged by frost last year. In addition, there are new crops that will go into production. Imports are expected to increase by 15,000 tons and to stand at 195,000 tons, as the increase in supplies from Chile will more than compensate for the lower shipments from the United States. Although higher tariffs are maintained for American cherries, the United States is expected to remain China's main supplier in the northern hemisphere. United States US production is expected to remain stable at 450,000 tons. Imports are expected to increase to 18,000 tons with more supplies available from Chile. Exports are forecast to decrease for the second consecutive year to 80,000 tons, as high retaliatory tariffs continue to suppress US shipments to China. If this happens, it will be the first time that US cherry exports experience a decrease in 2 consecutive years since 2002/03, when production suffered a fall of 44%. European Union EU production is projected to fall by more than 20%, remaining at 648,000 tons because of the hail that affected the early varieties in Italy, and the frost, low temperatures, and drought that caused a significant loss of fruit in Poland, the main producer. Lower supplies are expected to pressure exports to 15,000 tons and increase imports to 55,000 tons. Russia Russia's imports are expected to contract by 13,000 tons to 80,000 with lower supplies from Kazakhstan, Moldova, and Serbia. Source - https://www.freshplaza.com

09.08.2019

EU - 20% fewer apples and 14% fewer pears than last year

This year's European apple production is expected to come to 10,556,000 tons. That is 20% less than last year. It is also 8% less than the average over the past three years. The European pear harvest is expected to be 2,047,000 tons. This is 14% lower than last year and 9% less than the previous three seasons average. These figures are according to the World Apple and Pear Association, WAPA's top fruit prognoses. They presented their report at Prognosfruit this morning. Apple harvest per country Poland is Europe's apple-growing giant. This country is expected to process 44% fewer apples. The yield is expected to be 2,710,000 tons. Last year, this was still 4,810,000 tons. In Italy, yields are only three percent lower than last year. According to WAPA, this country will have an apple harvest of 2,195,000 tons. France takes third place. They will even have 12% more apples than last year to process - 1,652,000 tons. Pear harvest per country With 511,000 tons, Italy's pear harvest is much lower than last year. It has dropped by 30%. In terms of the average over the previous three seasons, this fruit's yield is 29% lower. In the Netherlands, the pear harvest is expected to be six percent lower, at 379,000 tons. This volume is still 3% more than the average over the last three years. Belgium has 10% fewer pears (331,000 tons) than last year. They are just ahead of Spain. With 311,000 tons, Spain who will harvest four percent more pears. Apple harvest per variety The Golden Delicious remains, by far, the largest apple variety in Europe. It is expected that 2,327,000 tons of these apples will be harvested this year. This is three percent less than last year. At 1,467,000 tons, Gala estimations are exactly the same as last year. The European Elstar harvest will also be roughly equivalent to last year. A volume of 355,000 tons of this variety is expected. Pear harvest per variety Looking at the different varieties, the European Conference is estimated to be 8% lower than last year. A volume of 910,000 tons is expected. The low Italian pear estimate will result in 34% fewer Abate Fetel pears (211,000 tons) being available. This is according to WAPA's estimate. This makes this variety smaller than the Williams BC (230.000 ton) in Europe. Source - https://www.freshplaza.com

30.01.2018

Spring frost losses and climate change not a contradiction in terms - Munich Re

Between 17 April and 10 May 2017, large parts of Europe were hit by a cold snap that brought a series of overnight frosts. As the budding process was already well advanced due to an exceptionally warm spring, losses reached historic levels – particularly for fruit and wine growers: economic losses are estimated at €3.3bn, with around €600m of this insured. In the second and third ten-day periods of April, and in some cases even over the first ten days of May 2017, western, central, southern and eastern Europe experienced a series of frosty nights, with catastrophic consequences in many places for fruit growing and viticulture. The worst-affected countries were Italy, France, Germany, Poland, Spain and Switzerland. Losses were so high because vegetation was already well advanced following an exceptionally warm spell of weather in March that continued into the early part of April. For example, the average date of apple flowering in 2017 for Germany as a whole was 20 April, seven days earlier than the average for the period 1992 to 2016. In many parts of Germany, including the Lake Constance fruit-growing region, it even began before 15 April. In the case of cherry trees – whose average flowering date in Germany in 2017 was 6 April – it was as much as twelve days earlier than the long-term average. The frost had a devastating impact because of the early start of the growing season in many parts of Europe. In the second half of April, it affected the sensitive blossoms, the initial fruiting stages and the first frost-susceptible shoots on vines. Meteorological conditions The weather conditions that accounted for the frosty nights are a typical feature of April, and also the reason for the month’s proverbial reputation for changeable weather. The corridor of fast-moving upper air flow, also known as the polar front, forms in such a way that it moves in over central Europe from northwesterly directions near Iceland. This north or northwest pattern frequently occurs if there is high air pressure over the eastern part of the North Atlantic, and lower air pressure over the Baltic and the northwest of Russia. Repeated low-pressure areas move along this corridor towards Europe, bringing moist and cold air masses behind their cold fronts from the areas of Greenland and Iceland. Occasionally, the high-pressure area can extend far over the continent in an easterly direction. The flow then brings dry, cold air to central Europe from high continental latitudes moving in a clockwise direction around the high. It was precisely this set of weather conditions with its higher probability of overnight frost that dominated from mid-April to the end of the month. There were frosts with temperatures falling below –5°C, in particular from 17 to 24 April (second and third ten-day periods of April), and even into the first ten-day period of May in eastern Europe. The map in Fig. 2 shows the areas that experienced night-time temperatures of –2°C and below in April/May. High losses in fruit and wine growing Frost damage to plants comes from intracellular ice formation. The cell walls collapse and the plant mass then dries out. The loss pattern is therefore similar to what is seen after a drought. Agricultural crops are at varying risk from frost in the different phases of growth. They are especially sensitive during flowering and shortly after budding, as was the case with fruit and vines in April 2017 due to the early onset of the growing season. That was why the losses were so exceptionally high in this instance. In Spain, the cold snap also affected cereals, which were already flowering by this date. Even risk experts were surprised at the geographic extent and scale of the losses (overall losses: €3.3bn, insured losses: approximately €600m). Overall losses were highest in Italy and France, with figures of approximately a billion euros recorded in each country. Two basic concepts for frost insurance As frost has always been considered a destructive natural peril for fruit and wine growing and horticulture, preventive measures are widespread. In horticulture, for example, plants are cultivated in greenhouses or under covers, while in fruit growing, frost-protection measures include the use of sprinkler irrigation as well as wind machines or helicopters to mix the air layers. Just how effective these methods prove to be will depend on meteorological conditions, which is precisely why risk transfer is so important in this sector. There are significant differences between one country and the next in terms of insurability and insurance solutions. But essentially there are two basic concepts available for frost insurance: indemnity insurance, where hail cover is extended to include frost or other perils yield guarantee insurance covering all natural perils In most countries, the government subsidises insurance premiums, which means that insurance penetration is higher. In Germany, where premiums are not subsidised and frost insurance density is low, individual federal states like Bavaria and Baden-Württemberg have committed to providing aid to farms that have suffered losses – including aid for insurable crops such as wine grapes and strawberries. Late frosts and climate change There are very clear indications that climate change is bringing forward both the start of the vegetation period and the date of the last spring frost. Whether the spring frost hazard increases or decreases with climate change depends on which of the two occurs earlier. There is thus a race between these two processes: if the vegetation period in any given region begins increasingly earlier compared with the date of the last spring frost, the hazard will increase over the long term. If the opposite is the case, the hazard diminishes. Because of the different climate zones in Europe, the race between these processes is likely to vary considerably. Whereas the east is more heavily influenced by the continental climate, regions close to the Atlantic coastline in the west enjoy a much milder spring. A study has shown that climate change is likely to significantly reduce the spring frost risk in viticulture in Luxembourg along the River Moselle1. The number of years with spring frost between 2021 and 2050 is expected to be 40% lower than in the period 1961 to 1990. By contrast, a study on fruit-growing regions in Germany2 concluded that all areas will see an increase in the number of days with spring frost, especially the Lake Constance region, where reduced yields are projected until the end of this century. At the same time, however, only a few preliminary studies have been carried out on this subject, so uncertainty prevails. Outlook The spring frost in 2017 illustrated the scale that such an event can assume, and just how high losses in fruit growing and viticulture can be. Because the period of vegetation is starting earlier and earlier in the year as a result of climate change, spring frost losses could increase in the future, assuming the last spring frost is not similarly early. It is reasonable to assume that these developments will be highly localised, depending on whether the climate is continental or maritime, and whether a location is at altitude or in a valley. Regional studies with projections based on climate models are still in short supply and at an early stage of research. However, one first important finding is that the projected decrease in days with spring frost does not in any way imply a reduction in the agricultural spring frost risk for a region. So spring frosts could well result in greater fluctuations in agricultural yields. In addition to preventive measures, such as the use of fleece covers at night, sprinkler irrigation and the deployment of wind machines, it will therefore be essential to supplement risk management in fruit growing and viticulture with crop insurance that covers all natural perils. Source - ttps://www.munichre.com/

17.05.2014

Russia Livestock Overview: Cattle, Swine, Sheep & Goats

Private plots generate 48 percent of cattle, 43 percent of swine and 54 percent of sheep and goats in Russia.  The Russian government recently approved a new program that will succeed the National Priority Project in agriculture (NPP) titled, “TheState Program for Development of Agriculture and Regulation of Food and Agricultural Markets in 2008-2012,” that encourages pork and beef production and attempts to address Russia’s declining cattle numbers.  This program includes import-substitution policies designed to stimulate domestic livestock production and to protect local producers. In the beginning of 2007, the economic environment for swine production was generally unfavorable.  The average production cost was RUR40-45/kilo of live weight, while the farm gate price was RUR40/kilo live weight.  Pork producers have been expressing concern for years about sales after implementation of the NPP as pork consumption is growing at a slower rate than pork production.  As a result, the pork sector has been lobbying the Russian government to regulate imports in spite of the meat TRQ agreement. From January-September 2007, 1.38 million metric tons (MMT) of red meat was imported.  A 12-year decline in beef production has resulted in limited beef availability in the Russian market leading to a spike in prices.  In response, the Russian government has been force to take steps to increase the availability of beef by lifting a meat ban on Poland and by looking to Latin America for higher volumes of product.  Feed stocks decreased during the first 11 months of 2007 compared to the previous year which will likely create even greater financial problems for livestock operations in 2008 as feed prices continue to skyrocket.  Grain prices increased rapidly in Russia through the middle of July 2007 before stabilizing at high levels as harvest progress reports were released. The Russian pig crop is expected to increase by 6 percent in 2008, while cattle herds are predicted to decrease by 3.5 percent.  Some meat market analysts predict that by 2012, as new and modernized pig farming complexes reach planned capacity, pork production could reach 3.5 MMT – up 75 percent from 2008 estimates. According to the Russian Statistics Agency (Rosstat), 1/3 of all Russian “large farms” are unprofitable.  Many of these are involved in livestock production.  Small, inefficient producers are uncompetitive and have already begun disappearing from the market. The Russian veterinary service continues to playa decisive role in meat import supply management. Source - http://www.cattlenetwork.com

27.11.2012

Statistics Canada : Farm income, 2011

Realized net income for Canadian farmers amounted to $5.7 billion in 2011, a 53.1% increase from 2010. This rise followed a 19.0% increase in 2010 and a 19.6% decline in 2009. Realized income is the difference between a farmer's cash receipts and operating expenses, minus depreciation, plus income in kind. Realized net income fell in four provinces: Newfoundland and Labrador, Nova Scotia, Manitoba and British Columbia. In each, increases in costs outpaced gains in receipts. Farm cash receipts Farm cash receipts, which include market receipts from crop and livestock sales as well as program payments, rose 11.9% to $49.8 billion in 2011. This was the first increase since 2008. Market receipts alone increased 12.0% to $46.3 billion. Crop receipts, which increased 15.8% to $25.9 billion, contributed the most to the increase. Sales from livestock products rose 7.5% to $20.3 billion, the largest annual increase since 2005. Stronger prices for grains and oilseeds played a major role in the increase in crop revenues. For example, canola receipts increased 37.3% in 2011 on the strength of a 27.3% gain in prices. Grains and oilseed prices started rising in the last half of 2010 as a result of limited global stocks and strong demand. Even though prices peaked in mid-2011, prices for the year, on average, remained well above 2010 levels. Crop receipts rose in every province except Manitoba and Newfoundland and Labrador. In Manitoba, difficult growing conditions reduced marketings of most grains and oilseeds. In Prince Edward Island and New Brunswick, increases in potato prices and marketings helped push crop receipts higher. It was also stronger prices that were behind the rise in livestock receipts. Hog receipts increased 15.5% to $3.9 billion on the strength of a 14.7% price increase. Cattle prices rose 19.5% in 2011, while receipts increased 1.1% because of a reduced supply of market animals. Hog, cattle and calf prices increased in 2010. The upward trend continued throughout most of 2011, primarily because of low North American inventories and high feed grain costs. Receipts for producers in the three supply-managed sectors-dairy, poultry and eggs-increased 7.9% as rising prices reflected higher costs for feed grain and other production inputs. A 14.9% rise in chicken receipts exceeded increases for eggs (+8.7%) and dairy products (+5.3%). Program payments increased 11.2% to $3.5 billion in 2011. Increases in Quebec provincial stabilization payments as well as crop insurance payments in Manitoba and Saskatchewan accounted for much of the rise. Farm expenses Farm operating expenses (after rebates) were up 8.4% to $38.3 billion in 2011, the second-largest percentage increase since 1981. This increase followed two consecutive years of modest declines. Higher prices for fertilizer, feed and machinery fuel contributed to the increase in operating expenses. According to the Farm Input Price Index, both fertilizer and machinery fuel prices were up by over 25% in 2011. At the same time, feed grain prices increased by more than 30%. When depreciation charges were included, total farm expenses increased 8.2% to $44.1 billion. Depreciation costs rose 6.9%. Total farm expenses advanced in every province in 2011. The largest percentage increases occurred in Saskatchewan (+12.3%), Quebec (+9.5%) and Alberta (+9.0%). Total net income Total net income reached $5.8 billion, a $3.3 billion gain. There were large increases in Saskatchewan (+$2.1 billion), Alberta (+$567 million) and Ontario (+$470 million), while Newfoundland and Labrador, New Brunswick and Manitoba saw declines. Total net income adjusts realized net income for changes in farmer-owned inventories of crops and livestock. It represents the return to owner's equity, unpaid labour, and management and risk. The total value of farm-owned inventories rose by $165 million in 2011. A strong increase in deferred grain payments together with the first increase in cattle inventories since 2004 contributed to the rise. Note to readersRealized net income can vary widely from farm to farm because of several factors, including commodities, prices, weather and economies of scale. This and other aggregate measures of farm income are calculated on a provincial basis employing the same concepts used in measuring the performance of the overall Canadian economy. They are a measure of farm business income, not farm household income. Financial data for 2011 collected at the individual farm business level using surveys and other administrative sources will soon be tabulated and made available. These data will help explain differences in performance of various types and sizes of farms. For details on farm cash receipts for the first three quarters of 2012, see today's "Farm cash receipts" release. As a result of the release of data from the 2011 Census of Agriculture on May 10, 2012, data on farm cash receipts, operating expenses, net income, capital value and other data contained in the Agriculture Economic Statistics series are being revised, where necessary. The complete set of revisions will be released in the November 26, 2013, edition of The Daily. Table 1 Net farm income 2009 2010r 2011p 2009 to 2010 2010 to 2011 millions of dollars % change + Total farm cash receipts including payments 44,599 44,466 49,772 -0.3 11.9 - Total operating expenses after rebates 36,052 35,315 38,276 -2.0 8.4 = Net cash income 8,547 9,151 11,496 7.1 25.6 + Income-in-kind 39 40 45 2.6 11.1 - Depreciation 5,471 5,483 5,864 0.2 6.9 = Realized net income 3,115 3,709 5,677 19.0 53.1 + Value of inventory change -281 -1,157 165 ... ... = Total net income 2,834 2,551 5,842 ... ... Table 2 Net farm income, by province Canada Newfoundland and Labrador Prince Edward Island Nova Scotia New Brunswick Quebec millions of dollars 2010r + Total farm cash receipts including payments 44,466 118 407 500 479 7,171 - Total operating expenses after rebates 35,315 106 367 422 406 5,472 = Net cash income 9,151 12 41 78 73 1,699 + Income-in-kind 40 0 0 1 1 10 - Depreciation 5,483 8 41 59 54 727 = Realized net income 3,709 4 0 19 20 983 + Value of inventory change -1,157 -0 18 0 9 13 = Total net income 2,551 4 18 19 29 996 2011p + Total farm cash receipts including payments 49,772 120 477 527 533 7,967 - Total operating expenses after rebates 38,276 114 391 448 424 6,018 = Net cash income 11,496 6 86 79 109 1,949 + Income-in-kind 45 0 0 1 1 11 - Depreciation 5,864 9 43 62 55 767 = Realized net income 5,677 -2 43 18 55 1,194 + Value of inventory change 165 -0 -12 2 -50 -24 = Total net income 5,842 -3 31 20 5 1,170 Source - http://www.4-traders.com/

13.07.2011

Insuring an Expanding, Evolving Beast

As worldwide demand for livestock increases, managing the associated risks becomes ever more crucial - disease alone is estimated to be responsible for a 20% production loss. But, many farmers are not fully protected. What’s holding things back and which options show the most promise? Big business, systemic risk Greater, more efficient and reliable agricultural production is needed to support the world’s increasing global population and per capita consumption levels (figure 1). It is estimated, for example, that world demand for animal protein will have increased 50% by 2020. This sector is however exposed to some hefty, systemic risks including climate change and disease; some estimates suggest that a staggering 20% of total livestock production is lost as a result of disease. With the power to negatively impact GDP, managing the major risks that threaten such a high value - livestock farming represents 40% to 50% of the entire agriculture farmgate value - and fundamental economic sector is essential. Yet, there are still many unresolved issues around loss compensation, including significant uninsurable causes of loss. Concentrating on disease risk, we discuss the current situation and options for the future. Pinning-down a moving exposure Catastrophic weather risks such as drought and flood are a major threat to livestock farming output, income and business continuity. These risks are evolving as the world’s climate changes. Livestock farming also faces considerable losses from highly contagious disease e.g. Foot & Mouth disease, highly pathogenic avian influenza and classical and African swine fever. The list of animal diseases notifiable to the OIE (World Organization for Animal Health) now totals more than 100. These diseases are also evolving; new or forgotten pathogens can emerge and re-emerge. Other new or forgotten livestock risks can also become apparent, such as the recent dioxin contamination in Germany. Exactly how diseases and pollution or contamination events spread is another important, ever-changing risk factor: globalization and the destruction of ecosystems (changing climate and human population expansion) act to increase the spread and rate of spread of animal pathogens. At the same time, significant progress has been made by international bodies such as the OIE to mitigate the spread of disease. From the perspective of animal disease and beyond the inherent challenges of fluctuating inventories and animals values, there are also many external factors impacting the associated exposures (values at risk) and these are also constantly on the move (see below, ‘Many genes influencing the exposure’). Clearly the means to recover quickly after a major event is important both for farmers and for the customers they serve. Alternative supply sources may not be readily available and/or affordable, and livestock production is a lengthy and costly process. Not surprisingly, the demand for protection against all major livestock risks is increasing, but it is by no means comprehensively available. Significant gaps in cover are the norm, even in developed insurance markets and insurance premium directly attributable to livestock insurance remains relatively small on the worldwide scale. From an insurance perspective this primarily reflects the potential scale of loss, limited loss experience, that the standard of loss is not well defined, that events are not independent and that the many and complex factors influencing the ultimate exposure complicate frequency/severity modeling. Many genes influencing the exposure The example of Foot & Mouth disease in the U.K. highlights the pace and extent of movement in this risk sector (table 1). While the number of confirmed cases reduced in the later outbreak, the number of animals culled increased more than eight-fold and the loss mushroomed. There were changes that occurred in the intervening years which in part help to explain why the disease came within reach of so many more animals in 2001 and caused a much higher loss: In the 1960’s Foot & Mouth was endemic throughout Europe and as a consequence there was greater awareness of the clinical picture. Livestock farming became more intensive over this time. Farm sizes and stock numbers increased dramatically and production cycles were in general significantly cut from 30 months or more to 18-22 months (the introduction of BSE2 controls accelerated this switch). Auction markets became more concentrated (800 in 1967, and 170 in 2001), as did slaughter houses (3,000 in 1967 vs. 520 in 2001). As a result, in 2001 animals were moved around more frequently and over greater distances between farms, dealers, auction markets, slaughter houses etc., with individual animals sometimes moved up to several times a day. Not surprisingly then, the 1967 primary outbreak was reported before the infected animals had left the farm, whereas the 2001 outbreak was not reported until the animals were already at a slaughterhouse. The trend in farming (to meet increased demand, streamline process and improve profitability) continues to be towards fewer, larger, higher value and less diversified farming units, alone signifying higher individual direct and consequential exposures. Animals continue to be transported more frequently and over greater distances. Variable local hygiene standards and authority responses, which may change over time, and the increasing sensitivity to human health considerations, (60% of current human diseases have an animal origin5) must also be taken into account, including trends in preventive slaughter: Such severe measures help to mitigate the spread of a disease but also increase individual exposures, destroying both diseased and suspected/possible diseased animals. Although some markets offer limited cover for losses relating to government slaughter, it remains controversial as to whether such exposures are insurable. Options today and tomorrow for a changed species According to the World Bank Survey 2008, only 38% of the surveyed countries offer farmers livestock epidemic disease insurance, mostly on a compulsory, semi-public basis and retained in the country (government compensation schemes or dedicated compensation funds pre-financed by farmers on a compulsory basis). The figure is closer to 70% for livestock accident and mortality cover. Where such programs exist, country-specific insurance products are generally on offer covering losses beyond the schemes (with sub-limited or full-amount business interruption insurance). This can happen because in such cases the exposure is better constrained. In addition, there is corresponding higher risk awareness, improved data, sufficient insurance penetration, reduced anti-selection and more adequate premium levels. Risk analysis and modeling difficulties are therefore narrowed, though not wholly overcome. Where they exist, these insurance policies have been successful and have grown in popularity over past decades. Premium subsidies and governmental reinsurance options have also helped to promote viable commercial insurance solutions, in particular in emerging markets. Where schemes seek to transfer risk into the private sector, livestock disease risk is often placed into the international insurance market due to its systemic nature, and to the handful of players with the necessary underwriting expertise. In consequence of the many aforementioned factors impacting the exposure, indemnity sub-limits, more exact definitions of covered exposures and additional exclusions are incorporated into the policy wordings. The market has a high reliance on reinsurance, which is not yet widely available because of the remaining difficulties involved in modeling epidemic disease emergence, spread and impact. International organizations, primarily the OIE, have to date made tremendous progress in standardizing the responses of its member countries to possible disease outbreaks. This has opened up the potential for private risk transfer. However, without public schemes to limit the exposure and bring the abovementioned improvements, the private sector cannot generally provide affordable disease cover to farmers. Although there are some alternative solutions available for livestock, there is only one livestock mortality index cover in the world (Mongolia - with high correlation between low temperature and livestock mortality). Canada, the U.S. and Spain have livestock index covers for pasture and rangeland livestock farming. However, none of these index products can be applied to livestock epidemic risk. Looking to tomorrow, progress will continue in the areas of disease detection and eradication, and the need to feed a growing population and protect farming income will add pressure to finding workable financial solutions against major risks. The involvement of governments enables the private sector to support livestock risks and will hopefully be adopted by more countries. Solutions are possible and steps forward have been made. A fundamental point, however, is that the complexity of this risk and extreme diversity of outbreak and spread scenario, necessitate that individual countries find their own appropriate public-private partnership, in which reinsurance can play an important role. 1 Publication “The State of Food and Agriculture 2009: Livestock in the Balance”, February 2010, http://www.fao.org/publications/sofa/en. 2 Bovine spongiform encephalopathy (BSE) 3 Department for Environment, Food and Rural Affairs (DEFRA), U.K. http://www.defra.gov.uk/foodfarm/farmanimal/diseases/atoz/fmd/2001/1967a.htm#spread 4 Department for Environment, Food and Rural Affairs (DEFRA), U.K. http://www.defra.gov.uk/foodfarm/farmanimal/diseases/atoz/fmd/2001/index.htm, and “Economic Costs of the Foot and Mouth Disease outbreak in the United Kingdom in 2001”. http://www.mho.hopto.org/btec/lessons/unit%201%20indexperience/assessment/fmd.pdf. 5 World Organisation for Animal Health (OIE). http://www.oie.int/fileadmin/Home/eng/Media_Center/docs/pdf/Key_Documents/final-brochure-en.pdf Rinat Bektleuov, Senior Underwriter Agriculture, PartnerRe