Subsidized insurance in agriculture, the Italian anomaly. #CleanSpades

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Facilitated insurance in agriculture (AAA) is a key resource for covering damage to crops and plants, animals, farm facilities and where appropriate revenues (with experimental policies indexed to yield forecasts).

Coldiretti also set up here to drain public funding and resources from Italian farmers and ranchers. Also through its corporation Green Assicurazioni S.r.l., whose president Albano Agabiti is the same as AsnaCodi and Coldiretti Umbria. (1)

However, the inefficiencies and violations of laws go far beyond systematic conflicts of interest. MiPAAF violates EU rules by excluding the possibility of insuring only part of the crops and animals. And more funds provided by Brussels are burned. #CleanSpades.

Context. The National Rural Development Program (NRDP).

The N DP (National Rural Development Program), co-financed by the EAFRD (European Agricultural Fund for Rural Development), in deciding the fate of about 2 billion euros for the 2014-2020 period, has defined three strategic objectives:

1) prevention and management of business risks (measure 17). Through crop insurance, mutual funds and income stabilization,

2) To increase efficiency in the use of water resources. By means of incentives for restructuring, modernization and efficiency of irrigation infrastructure (Measure 4.3),

3) Preservation of animal biodiversity. Promote genetic improvement of livestock, including through an innovative integrated system of assistance (submeasure 10.2. See notes 2,3).

PSRN, € 1.535 billion for risk management in agriculture

Risk management(measure 17) has been allocated €1,535,534,479 in the 2014-2020 NRDP. Aiming to promote the supply and use of risk management tools in agriculture through three lines of intervention:

– Submeasure 17.1, ‘aimed at strengthening, developing and expanding the already existing system of support for subsidized agricultural insurance‘ (with allocation of 87 percent of programmed resources),

– Submeasure 17.2, which aims to introduce mutual funds for adverse weather, animal and plant diseases, pest infestations and environmental emergencies,

– Sub-measure 17.3, ‘which supports income stabilization tools based on mutuality among farmers, such as the Income Stabilization Tool‘ (IST).

PSRN, hundreds of millions of euros up in smoke

Data from five years of implementation of submeasure 17.1(subsidized insurance in agriculture) show that even in this sector Italy is unable to spend the European public funds allocated to it. As well as revealing that 35,117 files out of 650,691, more than 5 percent, were not admitted. (4) Tens of millions of euros-covering hundreds of millions of euros in damages to Italian farmers and ranchers-will thus definitely go up in smoke.

As of Dec. 31.19, the NRDP has committed 69.5 percent and disbursed 46.8 percent of the budget to beneficiaries. Not only because of the mismanagement of AGEA under the leadership of Gabriele Papa Pagliardini (business partner of the Coldiretti magic circle), which has already been censured by the Court of Auditors. (5) But also, in the specific case of AAA (subsidized insurance in agriculture), because of the low adherence of active farms to this support measure.

Subsidized insurance in agriculture, scarcity of memberships

The level of take-up of subsidized insurance in agriculture (AAA, submeasure 17.1), in 2019, is terribly low. 4.4 percent the national average of active insured farms in Italy. Only 0.6 percent in the Southern Regions and Islands, 2.4 percent in the Center. Levels of accessions by crop groups, in ascending order, show 0.04% for permanent forages, 0.1% olive, 0.2% nuts, 0.7% citrus, 1.0% nurseries, 2.2% forage crops, 2.5% legumes, 2.7% industrial plants (e.g., processing tomatoes), 3.7% vegetables, 4.4% cereals, 5.7% vines, 15% fresh fruit. (4)

‘Several structural reasons underlie this situation: as already highlighted by ISMEA’s direct surveys of a large sample of Italian farms, it is the Relatively high costs of policies and the bureaucratic-administrative burdens, resulting in long lead times and uncertainties in the disbursement of awards (…). Added to this is the chronic lack of knowledge of the instrument, and the opportunities it offers, on the part of a significant portion of farms in the South Central.’ (5)

subsidized insurance in agriculture

AAA, the responsibilities of the MiPAAF

The causes of the failure of subsidized insurance in agriculture in Italy are thus traced by MiPAAF, first and foremost, to the costs of the policies. Although 50-70% of these costs, depending on the type of insurance, are covered by public funding.

However, MiPAFF is primarily responsible for the high costs of AAAs, for two main reasons:

Limitation on the bargaining autonomy of farmers and ranchers. Who are forced by ministerial decree, only in Italy and in blatant contravention of EU rules, to ensure the entirety of crops by generalized categories (see next paragraph),

failure to control conflicts of interest between Coldiretti (an agricultural union with widespread distribution throughout the territory), its corporation Green Assicurazioni Srl( insurancebroker ) and its de facto subsidiary AsnaCodi, which associates 44 Defense Consortia (see notes 1,6).

Agricultural risk management plan 2021 and high costs ‘by decree’ of AAAs

The National Agricultural Risk Management Plan 2021 was adopted by former Minister Teresa Bellanova by DM 29.12.20, following technical discussions with stakeholders. (7) Coldiretti and its de facto subsidiary AsnaCodi (National Association of Defense Consortia, headquartered at Palazzo Rospigliosi), but also ANIA (National Association among Insurance Companies, which associates 131 companies representing almost 90 percent of the Italian insurance market, in terms of premiums). As well as IVASS (Insurance Supervision Institute) and other agricultural confederations.

Subsidized insurance costs in agriculture are high ‘by decree’. In fact, DM 29.12.20 stipulates the obligation to extend insurance coverage:

in agriculture, to ‘entire area in production for each type of crop product listed in Annex 1 point 1.1. cultivated within a municipal area‘ (Art. 3.6). With an extremely general description of the categories (e.g. pears, apples, peaches, wine grapes, hedgerows, evergreen ornamental trees, under-net production, etc.), which does not allow for the distinction of varieties within individual categories,

– on the farm, to the entire farm or to the entire production obtainable from each animal species raised within a municipal area (Article 5.8). Again, with an all-encompassing classification that neglects biodiversity (e.g. cattle, buffaloes, pigs, sheep and goats, poultry etc. Annex 1, item 1.7).

AAA, expensive policies ‘by decree’. Violation of EU rules

Policies in agriculture are not mandatory, remember. But the condition imposed by MiPAAF in order to obtain their public funding (in shares varying from 50 to 70 percent of the premium) is that the farmer and rancher insure the entire production by macro-categories. So for example, the farmer who has an interest in insuring against hail only fruits and vegetables destined for market stalls-but not also those destined for canning companies, perhaps grown in other fields-is forced to insure the entire production located in the same municipality, or nothing at all. And the breeder who decides to insure only the animals of the most valuable breed cannot do so.

This serious limitation on contractual autonomy, it should be noted, has no correspondence or justification in EU rules on rural development support. (8) And indeed, it is blatantly at odds with its objectives, aimed at encouraging innovation and competitiveness, ‘the conservation of plant genetic resources threatened by genetic erosion‘ and ‘the breeding of indigenous breeds threatened with abandonment‘ (EU Reg. 1305/2013, Recital 62). In the context of the ‘Europe 2020 strategy for smart, sustainable and inclusive growth‘ (Cons. 41). ‘SMEs are the backbone of the Union’s rural economy‘ (Cons. 18), but then-Minister Bellanova, under the influence of counter-intervenors, favors the benefit of brokers at Palazzo Rospigliosi. Abuse of office?

Agricultural policies and private interests

The MiPAAF decree 29.12.20-in forcing farmers and ranchers to make the radical choice between insuring ‘all or nothing’ for each macro category- therefore unjustifiably restricts the parties’ bargaining autonomy. With the result of disincentivizing, rather than encouraging, access to subsidized insurance in agriculture.

The paradox is that policy costs will remain high until memberships are so widespread that insurance companies can ‘spread’ risks over a much larger and more differentiated ceiling. But politics tainted by the interests of the usual knowns is so short-sighted that it undermines the goals of the community.

#CleanSpades, if not now when?

Dario Dongo

Notes

(1) Dario Dongo. Subsidized insurance in agriculture, the big business of Coldiretti’s magic circle. #CleanSpades. GIFT (Great Italian Food Trade). 1.3.21, https://www.greatitalianfoodtrade.it/mercati/assicurazioni-agevolate-in-agricoltura-i-grandi-affari-del-cerchio-magico-di-coldiretti-vanghepulite

(2) Dario Dongo. Livestock system and biodiversity, public disbandment. #CleanSpades. GIFT (Great Italian Food Trade). 3/31/21, https://www.greatitalianfoodtrade.it/mercati/sistema-allevamento-e-biodiversità-sbando-pubblico-vanghepulite

(3) €93 million has been allocated to AIA, the Italian Livestock Breeders Association colonized by Coldiretti, to implement the LivestockEnvironment Open data(LEO) system

(4) MiPAAF. Evaluation Service of the National Rural Development Program PSRN 2014-2020. Annual evaluation report as of 12/31/19. https://www.politicheagricole.it/flex/cm/pages/ServeAttachment.php/L/IT/D/9%252Ff%252F3%252FD.7567b59b77571ee46bfd/P/BLOB%3AID%3D11903/E/pdf

(5) Dario Dongo. Report of the Court of Auditors on AGEA directed by Gabriele Papa Pagliardini. #CleanSpades. GIFT (Great Italian Food Trade). 12.3.21, https://www.greatitalianfoodtrade.it/mercati/relazione-della-corte-dei-conti-sull-agea-diretta-da-gabriele-papa-pagliardini-vanghepulite

(6) Green Assicurazioni S.r.l., headquartered in Palazzo Rospigliosi, has been operating as an intermediary in the insurance industry since 3.11.06. Its sales increased by 25 percent, between 2018 and 2019, thanks to its collaboration with Net Insurance SpA specifically in the distribution of the ‘Hail and Other Weather Adversity Policy’

(7) DM 29.12.20 no. 9402305. Agriculture risk management plan 2021. MiPAAF. https://www.politicheagricole.it/flex/cm/pages/ServeAttachment.php/L/IT/D/3%252F5%252Fe%252FD.1aec45d36caa7558c486/P/BLOB%3AID%3D16490/E/pdf

(8) Reg. EU 1305/2013, on support for rural development by the European Agricultural Fund for Rural Development (EAFRD). Consolidated text as of 1.1.21, at https://eur-lex.europa.eu/eli/reg/2013/1305/oj

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Dario Dongo, lawyer and journalist, PhD in international food law, founder of WIISE (FARE - GIFT - Food Times) and Égalité.