Critique of Bavaria's Agricultural Insurance Support Sparks Controversy
Bavaria's Agricultural Insurance Funding under Fire from ORH (Organization for Resilience in Horticulture) - Bavaria faces criticism from ORH over agricultural insurance backing: ORH voices dissent on Bavaria's backing for agricultural insurance.
Bavaria's auditors have slammed the Ministry of Agriculture's practice of funding insurance against various weather risks for farmers, dubbing it inefficient. The outrage stems from systemic free-riding effects due to the mandatory inclusion of hail insurance, resulting in missed opportunities for substantial savings. The auditors urge the ministry to formulate clearer guidelines for the upcoming 2026 support directive and avoid excessive spending.
Since 2023, the Ministry of Agriculture has been providing support for insurance against diverse weather hazards such as hail, frost, and drought. By 2027, this support is planned to escalate from 17 million euros yearly to 25 million euros. The insurance companies are banking on permanent state subsidies, with the subsidy reaching up to 50% of eligible premiums, capped at 100,000 euros. Presently, the federal government does not partake in the support, with half of the financial requirements met by EU funds.
Alarmingly, the auditors criticize the Bavarian Ministry's approach despite the substantial use of public funds, as there has been limited acceptance among farmers. The auditors argue that farmers are expected to shield themselves against a broad range of weather risks with Multiple Peril Crop Insurance (MPCI), but it is underutilized. Funds predominantly flow to farmers who already insured their specialized crops, like hops, against hail earlier.
The auditors also highlight that farmers must cover risks considered unlikely for their location to benefit from the support. On the flip side, fruits, wine, nurseries, and hops cannot be insured against drought.
Greens' Budget Policy Spokeswoman, Claudia Köhler, points out excessive spending with minimal achieved results, advocating for targeted and differentiated support tailored to each individual operation. For this, monitoring is essential, allowing the support to be adjusted accordingly. Mia Goller, the Agricultural Policy Spokeswoman, echoes Köhler, suggesting that adjusting the support model and providing more personalized solutions could skyrocket acceptance.
Key Points
- Bavaria's auditors heavily criticize the high-cost, low-impact agricultural insurance support practice.
- The mandatory inclusion of hail insurance contributes to systemic free-riding effects.
- Greens argue that support should be targeted and differentiated, requiring monitoring for adjustments.
- Farmers' mistrust and affordability concerns remain significant obstacles to increased participation in insurance programs.
Background Information
- Bavaria, located in southern Germany, faces numerous challenges related to managing natural disaster risks like floods and extreme weather due to climate change.
- The German insurance industry is grappling with catastrophe management and evolving insurance models as a response to climate change and disaster risks.
- Federal discussions regarding mandatory flood insurance schemes indicate a move toward broader coverage frameworks in response to climate change and disaster risk.
- Agricultural insurance coverage is criticized for its adequacy and affordability under increasing climate risks.
- Participation in agricultural insurance schemes is influenced by perceived value, cost, and trust in the system.
- The auditors recommend that Bavaria's Ministry of Agriculture revises its employment policy for the 2026 support directive, considering the current financing policy it employs and aiming for efficient and fair distribution of resources to address the underutilization of Multiple Peril Crop Insurance (MPCI).
- Despite the substantial use of public funds for agricultural insurance support, the Greens argue that the industry should focus on targeted and differentiated employment policies tailored to each individual operation, emphasizing the need for monitoring and adjustments to foster increased participation and combat affordability concerns.
