Crop insurance with subsidies in Poland – do it works?
2018
Wicka, A., Warsaw Univ. of Life Sciences (Poland). Faculty of Economics
The aim of this study is to assess the functioning of compulsory crop insurance subsidized by the state budget in Poland and the reasons limiting its development. The analysed period included years 2006–2016, and for quantitative data – years 2009–2015. The author used statistical data from Central Statistical Office and governmental institutions. It was found that compulsory crop insurance developed dynamically in the early years after introduction of the concept. Each year, about PLN 200 million was paid by the state budget to subsidize crop insurance (ca. EUR 50 million). After year 2010, the area of crops insured reached 3 million hectares and it stopped to increase despite the incentives. Farmers were most eager to secure those crops, which are susceptible to natural risks, as well as those with high shares in the sowing structure. Rapeseed production was insured almost entirely, production of sugar beets and corn – in about 30 %, and cereals – in 20 %. The most significant barriers preventing popularization of crop insurance in Poland included: fragmentation of farms and low workforce productivity, low income in farming, high diversification of production and income of farms, high significance of direct subsidies in agricultural income, as well as high policy prices and low compensation amounts. In addition, for insurance companies, crop insurance was not profitable. The planned increase in the level of insurance subsidies to PLN 1.4 billion, increase in the level of subsidies to 65 % and the maximum level of subsidized premium to 9 % should contribute to elimination of the barriers observed and achievement of the planned level of crop insurance of 70 % of the area by year 2025.
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