The risk management policy in agriculture has become
particularly prominent nowadays, considering
the evolution of the measures of the Common
Agricultural Policy (CAP) and the dreaded climate
change, which seems to have considerable effects in
terms of frequency and intensity of adverse
climatic events.
In a broader frame of reference, it is the Word Trade
Organization Agreement on Agriculture (WTO)
that places constraints on the risk management policy
in each economy.
In this context, the aim is to analyze the causes of
the great loss of efficiency detected in the current
Italian insurance system, unable to deal with specific
insurance coverage demands from each type of
agricultural business.
The analysis has been led through the economic
evaluation of the instruments offered by the
insurance market to winegrowers and the simultaneous
comparison with the probabilistic evolution of
adverse climatic events in the Controlled and
Guaranteed Denomination of Origin (Docg) area of
Conegliano–Valdobbiadene. Research is carried out
through a sensitivity analysis, by applying the
comparative statics approach. Furthermore, a measure of
efficiency of the sector policy is suggested.
This is used in the empirical analysis as a measure of
the reliability of the public intervention. The
study highlights that the subsidized coverage alone is
not the most adequate measure of agricultural
policy anymore. Adhering to preferential programs
implies the drafting of a supplementary insurance
policy in order to minimize the loss function. The
current insurance system impasse demonstrates that
the producer hardly accepts policies which do not
convert into an immediate income benefit.
From another perspective, the European risk management
regulations, while trying to adjust to global
rules, show the loss limit in terms of usefulness and
efficiency of the agrarian policy instruments in
use.
The prediction of probabilistic increase of
severe-weather patterns cannot provide a complete
solution, there still remains the issue concerning how
to split the loss expenses among society and
farmers, while insurance companies cannot disregard
their own economic balance, which in contrast
benefits from it. One possible answer to the current
situation could come from the development of
innovative coverage instruments, like the weather index
based derivatives.
The search for innovative risk assessment models
appears more urgent, for new models that could
combine the different needs of stakeholders: farmers,
insurance companies, society.
Author(s) Details
Fabian Capitanio
Department of Veterinary Medical Sciences and Agricultural Economics,
University of Naples Federico II, Italy.
Antonio De Pin
Department of Economics and Agricultural Economics, Ca' Foscari University
of Venice, Italy.
View Book :- https://bp.bookpi.org/index.php/bpi/catalog/book/252
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