The New Instruments of Risk Management in Agriculture in the European Union

Abstract

The specific character of farming was perceived since the beginning of the creation of the European Community. Initiation and systematic evolution of Common Agricultural Policy aim at harmonious development farmstead. Any negative events, especially catastrophic, don’t allow to execute plans and it can be a cause of abandonment of farms by farmers. This can upset the situation on food market. European Community, in its regulations, allows and even recommends the use of various support instruments. In response to Commission Regulation (EC) No 1857/2006 of 15 December 2006 on the application of Articles 87 and 88 of the Treaty to State aid to small and medium-sized enterprises active in the production of agricultural products, subsidized crop and animal insurance were introduced in Poland. Much larger opportunities are offered by solution which are financed by assets derived from the mechanism of modulation and defined by Council Regulation (EC) No 73/2009 of 19 January 2009 establishing common rules for direct support schemes for farmers under the common agricultural policy and establishing certain support schemes for farmers. That can be wider range of subsidized crop, animal and plant insurance or mutual funds. Mutual fund is a mechanism that allows affiliated farmers pay compensation for economic losses incurred as a result of animal and plant diseases and environmental incidents. This regulation defines the financial rules of the fund and the possible use of this mechanism in the public and the EU. At the same time, there are many concerns about the practical implementation of this solution. Mutual fund can be a complementary tool for the protection of risks, which cannot be accepted by the insurance market. Experiences of Member States with regard to its use are small, but the examples of countries in which it operates (in this article indicates the Italian example) suggest that it may be a simple in its design but highly effective tool. And it will allow for more complete protection of agricultural productionThe paper tries to identify the organizational and financial solutions to the mutual fund concept and proposed the establishment of specific solutions for this mechanism in Poland. This paper will present a discussion of the benefits from the introduction of this solution on the Polish and European market for agricultural insurance.