Latvian Agriculture Minister Arnis Krauze has told the LETA News Agency in an interview that if the country’s farmers refuse to support the establishment of a special risk fund to deal with damage caused by natural disasters, then the government may be forced to implement changes to the process.
Farmers must be prepared for the fact that if the risk fund is not created, there will be no more compensation from the national budget of the type that was paid this year and last, the minister said. If farmers want the government to be involved in risk prevention, then they must be involved in the process themselves, he added. If not, the only option remaining for risk prevention is insurance.
“I believe that a risk fund is very much necessary,” Krauze explained. “It is not insurance, but it provides a safety net for farms which see declining revenues because geopolitical market changes or climate conditions. If agricultural organisations prove to be against the establishment of such a fund, however, then I will not insist that it be included in next year’s national budget.”
Asked how not to break up the existing insurance system and how to provide compensation in areas where insurance is not available, Minister Krauze said that the risk fund is never intended to compete with insurance. It is designed to insure crops or fields, and in the case of natural damage, farmers can seek compensation and aid.
Elsewhere in Europe, Krauze said, risk funds are triggered only when a farm’s total revenues decline by at least 20%, while in most other countries the threshold is 30%. This means that the risk fund would be triggered for farms which have had a very bad year, with total revenues falling by at least 30% from the last five-year average, excluding the best and the worst year.
Krauze insisted that the risk fund would be a safety net to ensure that farms are not forced into insolvency, but it will not be a replacement for insurance.
Source: BNS
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