Thursday, November 29 2018 16:00

ArmInfo.Starting from February-March 2019 in the Ararat and Armavir regions of Armenia, a  pilot program on agro-insurance will start, which will cost the state  treasury 360 million drams. The possibility of testing the program in  the Shirak region of the republic is also discussed. On November 29,  answering the question of ArmInfo, this was reported by the Acting  Minister of Agriculture of Armenia Gegham Gevorgyan.

According to the Acting Minister of Agriculture, the agricultural  risk insurance system will be a new solution to fully cover the  farmer's losses. Today, agriculture's losses from natural disasters  in the amount of about 12 billion AMD (about $ 25 million) are  compensated by the state, but in case of insurance, these  compensations will be assigned to insurance companies. At the initial  stage, the insurance will cover fruits and vegetables - apricot and  grapes. Insured risks will be hail and frost. Agricultural insurance  in the field of livestock is not currently considered. "Nothing like  this has been done before - the system provides for 100% compensation  for farmers' losses," Gevorgyan said. According to him, at this  stage, those responsible for the field are meeting with farmers,  introducing them to the program. "All farmers are unequivocally in  favor of the introduction of the program," Gevorgyan said, stressing  that the program provides for subsidized insurance contributions. The  subsidies will make 60-65% of the cost of the insurance policy, and  the farmer will have to pay 30-35 thousand drams per 1 hectare.

By the end of December this year, work will be completed on the  development of all necessary documents, final negotiations will be  held with the Central Bank, commercial banks and insurance companies.  The National Agricultural Risk Management Agency will finally be  established. The Agency will be the tool by which the consequences of  natural disasters will be evaluated. An institute of damage  evaluators will be set up, the main insurable risks will be selected.  NARMA will also develop insurance products. As indicated by the  Acting Minister, almost all insurance companies operating in Armenia  are interested in participating in the program.

Meanwhile, as told Artak Martirosyan, Advisor to the Executive  Director of Nairi Insurance IC told earlier ArmInfo, to this day, no  memorandums have been signed with insurance companies on the start of  the agricultural insurance program. In a recent press tour to the  Ararat region, which took place within the framework of the  "Participatory Policies - Sustainable Agriculture" program, funded by  the EU under the "Commitment to a constructive dialogue" program,  Martirosyan noted in an interview with ArmInfo that in the global  aspect they are two key problems that delay the introduction of  agricultural insurance. "First of all, there is no complete view of  possible risks and losses resulting from them. At the same time,  there are no mechanisms for assessing the damage to agriculture. For  example, insurance companies should be aware of what area, when and  how much of this type of crop damage, "he explained. According to the  expert, the aforementioned issues are among the topics discussed  between the Central Bank and the German Development Bank KfW, which  is assisting Armenia in launching a program on the introduction of an  agricultural insurance system.

According to the Ministry of Agriculture, the German KfW bank should  allocate a grant of 5.3 million euros for the implementation of a  pilot program of the agricultural insurance system in Armenia. The  main grant amount of 4.8 million euros should be directed solely to  subsidize the purchase of insurance policies by farmers. The  remaining amount of 515 thousand euros will go to cover the costs  associated with consulting. At the same time, the RA Government,  represented by the Ministry of Agriculture, will come up with a  co-financing program in the amount of 5 million euros. Climate  Investment Fund will also provide 2 million euros, of which 200  thousand euros will be used to subsidize the purchase of insurance  policies, and 1.8 million euros - for consulting services. A  consortium consisting of three companies will handle consulting.  Together with these companies, the Ministry of Agriculture and the  Central Bank are preparing the first pilot project on agricultural  insurance in Armenia. 1.9 million euros will be allocated for the  establishment of NARMA, the retraining of personnel and the formation  of an institute of an appraiser, the development of by-laws and the  services of a consulting company.