Since 2020, a system of voluntary agricultural insurance has been operating in Kazakhstan. The state provides support in the form of subsidizing 50% of insurance premiums, which reduces the costs of peasants. Next year, subsidies will be increased to 80%. This was announced by the Minister of Agriculture of the Republic of Kazakhstan Yerbol Karashukeev during a meeting of the Senate.
As Senate deputy Olga Bulavkina noted, the topic of crop insurance is becoming more and more relevant in view of climate change.
“For example, last year in Kostanay and Akmola regions, more than 178 thousand hectares of grain crops suffered from drought. At the same time, only individual peasants who insured their crops were able to receive insurance payments. As world practice shows, the creation of a real system of insurance guarantees contributes not only to increasing the investment attractiveness of the industry, but also creates an additional guarantee for agricultural producers. And this is the return of part of their funds during the period of the insured event,” she said.
According to a government report, in 2021, funds in the amount of 1 billion 24 million tenge were allocated for agricultural insurance, which were paid to SHTP in connection with the occurrence of insured events.
Meanwhile, the deputy noted that the activity of farmers in this matter is extremely low.
“According to the same report, 156 thousand hectares were insured last year, which is less than 1% of the total sown area in the country. These areas are mainly located in Akmola, North Kazakhstan and Kostanay regions. For example, in the EU countries, more than 60% of agricultural areas are under insurance coverage, where climate risks are much lower than in Kazakhstan,” Olga Bulavkina informed.
In her opinion, one of the key reasons for the low demand for agricultural insurance in the country is the lack of state support and the lack of a culture of consumption of insurance products.
“Today in Kazakhstan, the state subsidizes 50% of the insurance premium for agricultural producers. Meanwhile, in countries with a developed agricultural sector, these rates vary from 60 to 95%,” said Olga Bulavkina.
The Minister of Agriculture of the Republic of Kazakhstan told what measures are being taken to stimulate agricultural insurance.
“The issue of insurance is acute for us. And indeed now the dissemination of the experience of insurance is not so widely used in our crop and animal husbandry. Therefore, we have already included and worked on the government’s action plan for 2022 (this issue. - Note ed.), Now almost all the necessary materials have been submitted to the Ministry of Finance on increasing the standard for subsidizing insurance premiums from 60% to 80%. We think that by the end of this year we will already apply this for insurance of farm animals. And from next year, 80% will be sold in crop production,” Yerbol Karashukeev informed.
He noted that experience shows that even a high percentage of subsidized insurance premiums is unlikely to be a guarantee that insurance will be widely adopted.
“In this regard, probably, based on the experience of the same Western countries, it is necessary to use the issue of stimulating the use from the point of view - to put the insurance of crops, farm animals as one of the necessary conditions for obtaining some other types of state support measures. It is used in the West. Therefore, on behalf of the government, the head of state, we now have a working group on reforming the subsidy system. As part of this working group, we will discuss the advisability of including such requirements. But from next year, subsidizing insurance premiums will be increased to 80%. I think that the size of the insured areas will increase,” said the head of the Ministry of Agriculture.