Agricultural Insurance Schemes (Executive Summary, 2008)

22.10.2009 783 views
This is an executive summary of the report. Please download report to full text (appr. 3MB) Agricultural producers face a series of risks affecting the income and welfare of their households. These are mainly production risks related to weather conditions, pests and diseases, market conditions, etc. Consequently, the income stability of agricultural stakeholders can be also affected. In recent years the European Union has been considering a possible integration of risk management in the common agricultural policy and is analysing risk and crisis management strategies to provide an improved response to crises in the agricultural sector. This report reviews the agricultural risk management systems in the EU (candidate countries Turkey and Croatia are also analysed) with a special focus on types of agricultural insurance, although no data could be collected for Malta. The most descriptive part of the study contains a collection of data on the realities and modalities of agricultural insurance in Europe. This information mainly comes from fact sheets filled in by experts or consultants from the different European countries and data from the European Committee of Insurers (CEA). Many of these data were unpublished because there is no obligation for the insurance companies to report to the EU institutions. Description of the current situation of agricultural insurance in the EU The EU has mostly classic insurance schemes (mainly single-risk and combined insurance, but also yield insurance), generally private except in Greece and Cyprus where insurance is public and compulsory. In many countries the market is in the hands of no more than two or three insurance companies. The level of development of agricultural insurance in each country is mainly linked to two decisive factors: - the needs faced in each country (risk level); - the economical support given by each Member State to the insurance systems. The role of governments is analysed for each country. Some do offer or subsidise insurances while others provide aid ex post given on an ad hoc basis through compensation schemes, calamity funds or futures markets existing in Europe, which can be partially financed by the agricultural stakeholders on a voluntary or compulsory basis. The different existing risk management tools are presented, analysed and compared in the report. This helps to understand better the evolution of the insurance systems in Europe, since the development of the insurance system depends very strongly on the presence of other risk management tools and on the role of the public sector, in particular ad hoc aid measures. Understanding and measuring the level of development of insurance The report gives an analysis of the volume of insurance and the market penetration or participation rates (in relative terms). Several comparisons are studied and shown through maps to conclude that the percentage of insured area does not give a sufficient measure to understand the importance or development of insurance in a country: it needs to be combined with the cover offered by the insurance schemes and with the market penetration in terms of insured value. Finally, we can point out that in Europe there is no comprehensive yield insurance without public support. For non-systemic risks, like hail, the private sector offers suitable insurances, but for insurance products offering a wide cover in yield reduction risk, there is a direct relationship between development of the system and public support. The amount of support provided by EU Member States to subsidise insurance premiums varies depending on the country’s policy to promote some particular type of cover. Some technicalities, like reinsurance, triggers and deductibles, are described. Reinsurance is usually done in the international reinsurance market, mainly in the modalities of stop-loss and quota-share reinsurance. Regulations, policies, State aid: towards a homogeneous system The definitions of crisis and disaster eligible for public aid in EU Member States are examined and compared with the ‘Community guidelines for State aid in br>the agriculture sector (2000–06)’ (EC, 2000). New Commission guidelines (EC, 2006b) and a new regulation (EC, 2006a) on the application of Articles 87 and 88 of the Treaty were adopted in December 2006. The definitions assumed are strongly shaped by WTO agreements. National experts provided information on the Member States’ definitions for disasters and crises which are eligible for aid, as well as the definitions of insurable risks, when they exist. Some countries forbid State aid in the case of crisis or disaster if the risk could have been insured. This is the case for Austria, Greece, Italy, Portugal, Spain, Sweden and Turkey for subsidised insurable risks and for France if insurance has reached a significant diffusion level. The regulation will partially condition State aid to buying some type of insurance from 2010 on. Most EU Member States follow the Community guidelines for State aid (EC, 2000) to decide when aid can be bestowed aid. We have classified the Member States in four groups according to their observance of the guidelines: some of them incorporate or explicitly mention the guideline definitions in their legislation; others just assume it without explicit mention; a third group have more restrictive definitions than those established in the guidelines, as it is the case for the calamity fund system in France. Lastly, some States have less restrictive definitions than those in the guidelines. These different attitudes of the Member States existed while the guidelines were only ‘advisory’. A few examples of definitions for disaster are shown below. (a) EU States with a more restrictive definition: France: crop losses above a higher threshold: 42 % of the production value of the damaged crop and 14 % of the whole farm gross revenue; also requires that no efficient preventive technique be available. Austria: disaster is defined by the public authorities related to the occasion; no aid for insurable risks. Portugal: damage on crop production of at least 50 % (…) of the yields usually obtained in the region. The Netherlands, Sweden and the UK: no aid is given for climatic risks on crops, only for livestock diseases. (b) EU States with a less restrictive definition: The Czech Republic: more detailed specification of defined risks called as ‘natural disasters’. Hungary: more risks defined as ‘natural disasters’; lower triggers, 15 % or 20 %, applying for some kind of support, like preferential credit or tax and lease reduction and cancellation. With the coming into force of the 2006 regulation this situation should change towards more homogeneous rules. Risk level: geographical analysis The variability of production and income is far from uniform across the EU: in some regions and sectors they are relatively stable, while in other regions or sectors they are highly unstable. Mapping the variability level has a twofold interest for the assessment of agricultural insurance: better understanding as for which geographical areas and sectors stabilisation is more important, and tuning the extrapolation of the premium rates in a hypothetical EU-wide system. The data required for analysing the variability of climatic risks, yield and income come from several sources: - meteorological databases and agrometeorological parameters computed by CGMS (crop growth monitoring system), which is the kernel of the JRC yield forecasting system for the EU; CGMS allows an analysis to be made at pan-European level of the status of the crops and on the harvest prospective and in this report it was used to develop climatic risk maps; - vegetation indexes computed on satellite images; - Eurostat’s REGIO database on yield of main crops; - the farm accountancy data network (FADN). Agricultural insurance systems in other countries The agricultural insurance systems existing in the world are reviewed. In Canada, the USA and other non-EU countries, some insurance instruments, such as index insurance, area insurance, whole farm insurance or revenue insurance, have been developed which are not developed in EU. In the United Kingdom there was a private revenue insurance product but it was soon removed from the market. In Canada and the USA there is yield insurance. In both countries, there is a basic cover for yield insurance which covers only for losses above the 50 % of the average yield (it is called catastrophic cover). It is highly subsidised by the government (almost entirely in the USA — where farmers pay only an administrative fee — and 50 % in Canada). The USA is currently the only country where revenue and income insurance exists; the report presents it in depth. In Canada there was an income insurance named Gross Revenue Insurance Plan which failed and now there is an income stabilisation programme, which is described in the report. The Canadian system is mainly led by public insurance agencies, from the provincial governments. It profits from subsidies, both from the federal and the provincial governments, which total EUR 425.5 million and which amount to 66 % of the premiums. Besides yield insurance products similar to those in the USA, it has an important income programme, Canadian agricultural income stabilisation (CAIS), which consists of stabilisation accounts. The stabilisation accounts are individual accounts where farmers put an amount of money every year, which they can withdraw in a year of big losses. They can be based on yields, revenues or other indices. Livestock sanitary and risk crises The report also reviews several studies made in the past few years to analyse the costs and impact of recent epidemic livestock outbreaks in Europe. We discuss the potential of livestock insurance to cover animal diseases and more general animal risks. Livestock epidemics can result in substantial losses for governments, farmers and all the other partakers involved in the livestock production chain. National governments and European institutions generally support the largest part of the direct losses, such as the value of destroyed animals and organisational costs. Consequential losses, such as losses resulting from empty buildings and movement standstills, are almost always completely borne by the farmers themselves if not insured privately. Few private insurance systems exist in Europe to cover the consequential losses due to livestock epidemics (e.g. they exist in Germany, Italy, Sweden, the Netherlands and the United Kingdom). Most general livestock insurance schemes cover death and emergency slaughter because of illness. The main reason for public concern is that certain diseases can be a large potential hazard for the economy and the health of the population; therefore public reaction is normally covered by legislation and there is less room for private insurance. Besides, forecasting high risks events is very difficult and insurers are reluctant to insure against ‘any disease’. Strategies of the public sector are rather focused on efficient risk-reducing behaviour, in particular through preventive measures. It seems possible to build a cost-sharing scheme only for covering losses caused by diseases with low or no externalities. Main figures of crop insurances at country level Approximately 23 % of crop value was insured in 2004 in the EU-27. Premiums amounted to EUR 1 583 million, i.e. 4 % of the insured value. Spain is generally considered as the country with the most developed systems and accounted for EUR 564 million although only 5.86 million ha were insured, showing relatively low market penetration (26 % of the cultivated area). In Germany, market penetration is higher (7.26 million ha, i.e. 43 % of the cultivated area), and the average amount of premiums accounted for EUR 129 million. This fact can be explained by considering that in Germany the insurance usually covers only a single risk (hail). On the other hand, the high value for Spain can be explained by the higher number of perils covered and the potentially higher risks there. Total subsidies amounted to EUR 497 million or 32 % of the premiums. Between countries, the amounts of subsidies to the premium are very different. We find the highest subsidy rates in Europe are in Italy and Portugal, for example the 80 % subsidy in Italy for yield insurance. In other countries, as in the UK, there is no subsidy at all. Average loss ratios — total claims paid by insurance companies during a certain number of years, divided by the total premiums of the same period — range from 60 % to 70 %. Feasibility of an EU-wide system of agricultural insurance We assess the feasibility of several scenarios with different types of insurances: single-risk insurance, yield insurance, index insurance, revenue/income insurance, etc. We consider socioeconomic criteria (related to decisions of the private sector: insurers, reinsurers and farmers) and technical criteria (cost/affordability, asymmetric information, easiness to control). Political criteria are essential, but beyond the scope of this report. The rough costs estimation of some of them indicates that a 50 % subsidy to the national premiums of all the countries, assuming an insurance demand of 40 %, would be approximately of the order of magnitude of EUR 1 billion for income insurance, EUR 0.5 billion to EUR 0.6 billion for yield insurance on arable crops, EUR 0.23 billion to EUR 0.37 billion for area index insurance for cereals and of EUR 0.20 billion to EUR 0.40 billion for fruits. The calculations were made assuming that the average premium rates would remain in a more developed system equal to current rates. However, these estimations require more in-depth analysis, because this assumption may be too strong. In the current situation, with very heterogeneous positions of Member States and very different levels of risk, it seems difficult to propose a common homogeneous insurance system, but some types could be of some interest: - revenue insurance: more expensive, but more efficient as income stabiliser; - indirect index insurance: cheaper and easier to manage and control, but usually less correlated with farmers’ income. Alternatives to a common agriculture insurance system A series of alternatives to a common system have been proposed and analysed; these should be simple to manage by the EU administration and easy to control. An alternative to a proper EU-wide insurance scheme could be a set of actions to foster national systems by: - facilitating/subsidising the composition of databases, preferably at farm level, in order to limit to the minimum any malfunctioning due to asymmetric information that leads to adverse selection and, to some extent, moral hazard; - reinsuring (many agricultural risks are considered non-insurable in most countries because they are too systemic); insurers and reinsurers are not willing to take this type of risk — the situation could change if there is strong public participation in the reinsurance scheme (USA and Spain); - clarifying the framework (in order to achieve a greater homogeneity of the national systems); this has been partly achieved with the new regulation (EC, 2006a); - partially subsidising national systems which are within the framework (this could be either insurance models, funds or other risk management tools — in any case, they should be within a common legal framework, establishing some control criteria and a common financing scheme). Maria Bielza Diaz-Caneja, Costanza Giulia Conte, Christoph Dittmann, Francisco Javier Gallego Pinilla, Josef Stroblmair

A Practical Method for Adjusting the Premium Rates in Crop-Hail Insurance with Short-Term Insurance Data

The frequency of hailstorms is generally low in small geographic areas. In other words, it may be very likely that hailstorm occurrences will vary between neighboring locations within a short period of time. Besides, a newly launched insurance scheme lacks the data. It is, therefore, difficult to sustain a sound insurance program under these circumstances, with premium rates based on meteorological data without a complimentary adjustment process.


Malta - Vegetable production dropped 7% in 2018

Last year, Malta’s local vegetable produce dropped by 7% when compared to the previous year. The total vegetables produced in tonnes amounted to 58,178, down by 7% when compared to 2017. Their value too diminished as the total produce was valued at €30 million, down by 13% over the previous year. The most significant drop was in potatoes, down by 27% over the previous year. Tomatoes and onions were the only vegetables to have increased in volume, by 3% and 4% respectively but their value diminished by 9% and 24% respectively. The figures were published by the National Statistics Office on the event of World Food Day 2019, which will be celebrated on Wednesday. Cauliflower, cabbage and lettuce produce dropped by 10%, 3%, and 12% respectively. In the realm of local fruit, a drop of produce was registered here too apart from strawberries, which experienced a whopping increase of 58% over 2017. Total fruit produced in 2018 amounted to 13,057 tonnes, down by 1% when compared to 2017. The total produce was valued at €10 million, a 3% increase in value. Peaches produced were down by 35% and the 376 tonnes of peaches cultivated amounted to €0.5 million in value. Orange produce dropped by 10% and lemon produce dropped by 14%. There was no change in the amount of grapes produced and the 3,642 tonnes of grapes produced in 2018 were valued at €2.3 million. 70% of fruit and vegetables consumed in Malta is imported. The drop in local produce could be the result of deleterious or unsuitable weather patterns. Source -


USA - Greenhouse tomato production spans most states

While Florida and California accounted for 76 percent of U.S. production of field-grown tomatoes in 2016, greenhouse production and use of other protected-culture technologies help extend the growing season and make production feasible in a wider variety of geographic locations. Some greenhouse production is clustered in traditional field-grown-tomato-producing States like California. However, high concentrations of greenhouses are also located in Nebraska, Minnesota, New York, and other States that are not traditional market leaders. Among the benefits that greenhouse tomato producers can realize are greater market access both in the off-season and in northern retail produce markets, better product consistency, and improved yields. These benefits make greenhouse tomato production an increasingly attractive alternative to field production despite higher production costs. In addition to domestic production, a significant share of U.S. consumption of greenhouse tomatoes is satisfied by imports. In 2004, U.S., Mexican, and Canadian growers each contributed about 300 million pounds of greenhouse tomatoes annually to the U.S. fresh tomato market. Since then, Mexico’s share of the greenhouse tomato market has grown sharply, accounting for almost 84 percent (1.8 billion pounds) of the greenhouse volume coming into the U.S. market. Source -


World cherry production will decrease to 3.6 million tons

According to information from the USDA for the 2019-2020 season, world cherry production is expected to decrease slightly and amount to 3.6 million tons. This decline is due to the damages that the weather caused on cherry crops in the European Union. Even though Chile is expected to achieve a record export, world trade in cherries is expected to drop to 454,000 tons, based on lower shipments from Uzbekistan and the US. Turkey Turkey's production is expected to increase to 865,000. As a result of the strong export demand, producers continue to invest and improve their orchards, switching to high yield varieties and gradually expanding the surface for sweet cherries. More supplies are expected to increase exports to a record 78,000 tons, continuing its long upward trend. Chile Chile's production is forecast to increase from 30,000 tons to 231,000 as they have a larger area of mature trees. Between 2009/10 and 2018/19, the crop area has almost tripled, a trend that is expected to continue. The country is expected to export up to 205,000 tons in higher supplies. The percentage of exports destined for China has increased from 13 to almost 90% since 2009/10. China China's production is expected to increase by up to 24% and to amount to 420,000 tons, due to the recovery of the orchards that were damaged by frost last year. In addition, there are new crops that will go into production. Imports are expected to increase by 15,000 tons and to stand at 195,000 tons, as the increase in supplies from Chile will more than compensate for the lower shipments from the United States. Although higher tariffs are maintained for American cherries, the United States is expected to remain China's main supplier in the northern hemisphere. United States US production is expected to remain stable at 450,000 tons. Imports are expected to increase to 18,000 tons with more supplies available from Chile. Exports are forecast to decrease for the second consecutive year to 80,000 tons, as high retaliatory tariffs continue to suppress US shipments to China. If this happens, it will be the first time that US cherry exports experience a decrease in 2 consecutive years since 2002/03, when production suffered a fall of 44%. European Union EU production is projected to fall by more than 20%, remaining at 648,000 tons because of the hail that affected the early varieties in Italy, and the frost, low temperatures, and drought that caused a significant loss of fruit in Poland, the main producer. Lower supplies are expected to pressure exports to 15,000 tons and increase imports to 55,000 tons. Russia Russia's imports are expected to contract by 13,000 tons to 80,000 with lower supplies from Kazakhstan, Moldova, and Serbia. Source -


EU - 20% fewer apples and 14% fewer pears than last year

This year's European apple production is expected to come to 10,556,000 tons. That is 20% less than last year. It is also 8% less than the average over the past three years. The European pear harvest is expected to be 2,047,000 tons. This is 14% lower than last year and 9% less than the previous three seasons average. These figures are according to the World Apple and Pear Association, WAPA's top fruit prognoses. They presented their report at Prognosfruit this morning. Apple harvest per country Poland is Europe's apple-growing giant. This country is expected to process 44% fewer apples. The yield is expected to be 2,710,000 tons. Last year, this was still 4,810,000 tons. In Italy, yields are only three percent lower than last year. According to WAPA, this country will have an apple harvest of 2,195,000 tons. France takes third place. They will even have 12% more apples than last year to process - 1,652,000 tons. Pear harvest per country With 511,000 tons, Italy's pear harvest is much lower than last year. It has dropped by 30%. In terms of the average over the previous three seasons, this fruit's yield is 29% lower. In the Netherlands, the pear harvest is expected to be six percent lower, at 379,000 tons. This volume is still 3% more than the average over the last three years. Belgium has 10% fewer pears (331,000 tons) than last year. They are just ahead of Spain. With 311,000 tons, Spain who will harvest four percent more pears. Apple harvest per variety The Golden Delicious remains, by far, the largest apple variety in Europe. It is expected that 2,327,000 tons of these apples will be harvested this year. This is three percent less than last year. At 1,467,000 tons, Gala estimations are exactly the same as last year. The European Elstar harvest will also be roughly equivalent to last year. A volume of 355,000 tons of this variety is expected. Pear harvest per variety Looking at the different varieties, the European Conference is estimated to be 8% lower than last year. A volume of 910,000 tons is expected. The low Italian pear estimate will result in 34% fewer Abate Fetel pears (211,000 tons) being available. This is according to WAPA's estimate. This makes this variety smaller than the Williams BC (230.000 ton) in Europe. Source -


Spring frost losses and climate change not a contradiction in terms - Munich Re

Between 17 April and 10 May 2017, large parts of Europe were hit by a cold snap that brought a series of overnight frosts. As the budding process was already well advanced due to an exceptionally warm spring, losses reached historic levels – particularly for fruit and wine growers: economic losses are estimated at €3.3bn, with around €600m of this insured. In the second and third ten-day periods of April, and in some cases even over the first ten days of May 2017, western, central, southern and eastern Europe experienced a series of frosty nights, with catastrophic consequences in many places for fruit growing and viticulture. The worst-affected countries were Italy, France, Germany, Poland, Spain and Switzerland. Losses were so high because vegetation was already well advanced following an exceptionally warm spell of weather in March that continued into the early part of April. For example, the average date of apple flowering in 2017 for Germany as a whole was 20 April, seven days earlier than the average for the period 1992 to 2016. In many parts of Germany, including the Lake Constance fruit-growing region, it even began before 15 April. In the case of cherry trees – whose average flowering date in Germany in 2017 was 6 April – it was as much as twelve days earlier than the long-term average. The frost had a devastating impact because of the early start of the growing season in many parts of Europe. In the second half of April, it affected the sensitive blossoms, the initial fruiting stages and the first frost-susceptible shoots on vines. Meteorological conditions The weather conditions that accounted for the frosty nights are a typical feature of April, and also the reason for the month’s proverbial reputation for changeable weather. The corridor of fast-moving upper air flow, also known as the polar front, forms in such a way that it moves in over central Europe from northwesterly directions near Iceland. This north or northwest pattern frequently occurs if there is high air pressure over the eastern part of the North Atlantic, and lower air pressure over the Baltic and the northwest of Russia. Repeated low-pressure areas move along this corridor towards Europe, bringing moist and cold air masses behind their cold fronts from the areas of Greenland and Iceland. Occasionally, the high-pressure area can extend far over the continent in an easterly direction. The flow then brings dry, cold air to central Europe from high continental latitudes moving in a clockwise direction around the high. It was precisely this set of weather conditions with its higher probability of overnight frost that dominated from mid-April to the end of the month. There were frosts with temperatures falling below –5°C, in particular from 17 to 24 April (second and third ten-day periods of April), and even into the first ten-day period of May in eastern Europe. The map in Fig. 2 shows the areas that experienced night-time temperatures of –2°C and below in April/May. High losses in fruit and wine growing Frost damage to plants comes from intracellular ice formation. The cell walls collapse and the plant mass then dries out. The loss pattern is therefore similar to what is seen after a drought. Agricultural crops are at varying risk from frost in the different phases of growth. They are especially sensitive during flowering and shortly after budding, as was the case with fruit and vines in April 2017 due to the early onset of the growing season. That was why the losses were so exceptionally high in this instance. In Spain, the cold snap also affected cereals, which were already flowering by this date. Even risk experts were surprised at the geographic extent and scale of the losses (overall losses: €3.3bn, insured losses: approximately €600m). Overall losses were highest in Italy and France, with figures of approximately a billion euros recorded in each country. Two basic concepts for frost insurance As frost has always been considered a destructive natural peril for fruit and wine growing and horticulture, preventive measures are widespread. In horticulture, for example, plants are cultivated in greenhouses or under covers, while in fruit growing, frost-protection measures include the use of sprinkler irrigation as well as wind machines or helicopters to mix the air layers. Just how effective these methods prove to be will depend on meteorological conditions, which is precisely why risk transfer is so important in this sector. There are significant differences between one country and the next in terms of insurability and insurance solutions. But essentially there are two basic concepts available for frost insurance: indemnity insurance, where hail cover is extended to include frost or other perils yield guarantee insurance covering all natural perils In most countries, the government subsidises insurance premiums, which means that insurance penetration is higher. In Germany, where premiums are not subsidised and frost insurance density is low, individual federal states like Bavaria and Baden-Württemberg have committed to providing aid to farms that have suffered losses – including aid for insurable crops such as wine grapes and strawberries. Late frosts and climate change There are very clear indications that climate change is bringing forward both the start of the vegetation period and the date of the last spring frost. Whether the spring frost hazard increases or decreases with climate change depends on which of the two occurs earlier. There is thus a race between these two processes: if the vegetation period in any given region begins increasingly earlier compared with the date of the last spring frost, the hazard will increase over the long term. If the opposite is the case, the hazard diminishes. Because of the different climate zones in Europe, the race between these processes is likely to vary considerably. Whereas the east is more heavily influenced by the continental climate, regions close to the Atlantic coastline in the west enjoy a much milder spring. A study has shown that climate change is likely to significantly reduce the spring frost risk in viticulture in Luxembourg along the River Moselle1. The number of years with spring frost between 2021 and 2050 is expected to be 40% lower than in the period 1961 to 1990. By contrast, a study on fruit-growing regions in Germany2 concluded that all areas will see an increase in the number of days with spring frost, especially the Lake Constance region, where reduced yields are projected until the end of this century. At the same time, however, only a few preliminary studies have been carried out on this subject, so uncertainty prevails. Outlook The spring frost in 2017 illustrated the scale that such an event can assume, and just how high losses in fruit growing and viticulture can be. Because the period of vegetation is starting earlier and earlier in the year as a result of climate change, spring frost losses could increase in the future, assuming the last spring frost is not similarly early. It is reasonable to assume that these developments will be highly localised, depending on whether the climate is continental or maritime, and whether a location is at altitude or in a valley. Regional studies with projections based on climate models are still in short supply and at an early stage of research. However, one first important finding is that the projected decrease in days with spring frost does not in any way imply a reduction in the agricultural spring frost risk for a region. So spring frosts could well result in greater fluctuations in agricultural yields. In addition to preventive measures, such as the use of fleece covers at night, sprinkler irrigation and the deployment of wind machines, it will therefore be essential to supplement risk management in fruit growing and viticulture with crop insurance that covers all natural perils. Source - ttps://


Russia Livestock Overview: Cattle, Swine, Sheep & Goats

Private plots generate 48 percent of cattle, 43 percent of swine and 54 percent of sheep and goats in Russia.  The Russian government recently approved a new program that will succeed the National Priority Project in agriculture (NPP) titled, “TheState Program for Development of Agriculture and Regulation of Food and Agricultural Markets in 2008-2012,” that encourages pork and beef production and attempts to address Russia’s declining cattle numbers.  This program includes import-substitution policies designed to stimulate domestic livestock production and to protect local producers. In the beginning of 2007, the economic environment for swine production was generally unfavorable.  The average production cost was RUR40-45/kilo of live weight, while the farm gate price was RUR40/kilo live weight.  Pork producers have been expressing concern for years about sales after implementation of the NPP as pork consumption is growing at a slower rate than pork production.  As a result, the pork sector has been lobbying the Russian government to regulate imports in spite of the meat TRQ agreement. From January-September 2007, 1.38 million metric tons (MMT) of red meat was imported.  A 12-year decline in beef production has resulted in limited beef availability in the Russian market leading to a spike in prices.  In response, the Russian government has been force to take steps to increase the availability of beef by lifting a meat ban on Poland and by looking to Latin America for higher volumes of product.  Feed stocks decreased during the first 11 months of 2007 compared to the previous year which will likely create even greater financial problems for livestock operations in 2008 as feed prices continue to skyrocket.  Grain prices increased rapidly in Russia through the middle of July 2007 before stabilizing at high levels as harvest progress reports were released. The Russian pig crop is expected to increase by 6 percent in 2008, while cattle herds are predicted to decrease by 3.5 percent.  Some meat market analysts predict that by 2012, as new and modernized pig farming complexes reach planned capacity, pork production could reach 3.5 MMT – up 75 percent from 2008 estimates. According to the Russian Statistics Agency (Rosstat), 1/3 of all Russian “large farms” are unprofitable.  Many of these are involved in livestock production.  Small, inefficient producers are uncompetitive and have already begun disappearing from the market. The Russian veterinary service continues to playa decisive role in meat import supply management. Source -


Statistics Canada : Farm income, 2011

Realized net income for Canadian farmers amounted to $5.7 billion in 2011, a 53.1% increase from 2010. This rise followed a 19.0% increase in 2010 and a 19.6% decline in 2009. Realized income is the difference between a farmer's cash receipts and operating expenses, minus depreciation, plus income in kind. Realized net income fell in four provinces: Newfoundland and Labrador, Nova Scotia, Manitoba and British Columbia. In each, increases in costs outpaced gains in receipts. Farm cash receipts Farm cash receipts, which include market receipts from crop and livestock sales as well as program payments, rose 11.9% to $49.8 billion in 2011. This was the first increase since 2008. Market receipts alone increased 12.0% to $46.3 billion. Crop receipts, which increased 15.8% to $25.9 billion, contributed the most to the increase. Sales from livestock products rose 7.5% to $20.3 billion, the largest annual increase since 2005. Stronger prices for grains and oilseeds played a major role in the increase in crop revenues. For example, canola receipts increased 37.3% in 2011 on the strength of a 27.3% gain in prices. Grains and oilseed prices started rising in the last half of 2010 as a result of limited global stocks and strong demand. Even though prices peaked in mid-2011, prices for the year, on average, remained well above 2010 levels. Crop receipts rose in every province except Manitoba and Newfoundland and Labrador. In Manitoba, difficult growing conditions reduced marketings of most grains and oilseeds. In Prince Edward Island and New Brunswick, increases in potato prices and marketings helped push crop receipts higher. It was also stronger prices that were behind the rise in livestock receipts. Hog receipts increased 15.5% to $3.9 billion on the strength of a 14.7% price increase. Cattle prices rose 19.5% in 2011, while receipts increased 1.1% because of a reduced supply of market animals. Hog, cattle and calf prices increased in 2010. The upward trend continued throughout most of 2011, primarily because of low North American inventories and high feed grain costs. Receipts for producers in the three supply-managed sectors-dairy, poultry and eggs-increased 7.9% as rising prices reflected higher costs for feed grain and other production inputs. A 14.9% rise in chicken receipts exceeded increases for eggs (+8.7%) and dairy products (+5.3%). Program payments increased 11.2% to $3.5 billion in 2011. Increases in Quebec provincial stabilization payments as well as crop insurance payments in Manitoba and Saskatchewan accounted for much of the rise. Farm expenses Farm operating expenses (after rebates) were up 8.4% to $38.3 billion in 2011, the second-largest percentage increase since 1981. This increase followed two consecutive years of modest declines. Higher prices for fertilizer, feed and machinery fuel contributed to the increase in operating expenses. According to the Farm Input Price Index, both fertilizer and machinery fuel prices were up by over 25% in 2011. At the same time, feed grain prices increased by more than 30%. When depreciation charges were included, total farm expenses increased 8.2% to $44.1 billion. Depreciation costs rose 6.9%. Total farm expenses advanced in every province in 2011. The largest percentage increases occurred in Saskatchewan (+12.3%), Quebec (+9.5%) and Alberta (+9.0%). Total net income Total net income reached $5.8 billion, a $3.3 billion gain. There were large increases in Saskatchewan (+$2.1 billion), Alberta (+$567 million) and Ontario (+$470 million), while Newfoundland and Labrador, New Brunswick and Manitoba saw declines. Total net income adjusts realized net income for changes in farmer-owned inventories of crops and livestock. It represents the return to owner's equity, unpaid labour, and management and risk. The total value of farm-owned inventories rose by $165 million in 2011. A strong increase in deferred grain payments together with the first increase in cattle inventories since 2004 contributed to the rise. Note to readersRealized net income can vary widely from farm to farm because of several factors, including commodities, prices, weather and economies of scale. This and other aggregate measures of farm income are calculated on a provincial basis employing the same concepts used in measuring the performance of the overall Canadian economy. They are a measure of farm business income, not farm household income. Financial data for 2011 collected at the individual farm business level using surveys and other administrative sources will soon be tabulated and made available. These data will help explain differences in performance of various types and sizes of farms. For details on farm cash receipts for the first three quarters of 2012, see today's "Farm cash receipts" release. As a result of the release of data from the 2011 Census of Agriculture on May 10, 2012, data on farm cash receipts, operating expenses, net income, capital value and other data contained in the Agriculture Economic Statistics series are being revised, where necessary. The complete set of revisions will be released in the November 26, 2013, edition of The Daily. Table 1 Net farm income 2009 2010r 2011p 2009 to 2010 2010 to 2011 millions of dollars % change + Total farm cash receipts including payments 44,599 44,466 49,772 -0.3 11.9 - Total operating expenses after rebates 36,052 35,315 38,276 -2.0 8.4 = Net cash income 8,547 9,151 11,496 7.1 25.6 + Income-in-kind 39 40 45 2.6 11.1 - Depreciation 5,471 5,483 5,864 0.2 6.9 = Realized net income 3,115 3,709 5,677 19.0 53.1 + Value of inventory change -281 -1,157 165 ... ... = Total net income 2,834 2,551 5,842 ... ... Table 2 Net farm income, by province Canada Newfoundland and Labrador Prince Edward Island Nova Scotia New Brunswick Quebec millions of dollars 2010r + Total farm cash receipts including payments 44,466 118 407 500 479 7,171 - Total operating expenses after rebates 35,315 106 367 422 406 5,472 = Net cash income 9,151 12 41 78 73 1,699 + Income-in-kind 40 0 0 1 1 10 - Depreciation 5,483 8 41 59 54 727 = Realized net income 3,709 4 0 19 20 983 + Value of inventory change -1,157 -0 18 0 9 13 = Total net income 2,551 4 18 19 29 996 2011p + Total farm cash receipts including payments 49,772 120 477 527 533 7,967 - Total operating expenses after rebates 38,276 114 391 448 424 6,018 = Net cash income 11,496 6 86 79 109 1,949 + Income-in-kind 45 0 0 1 1 11 - Depreciation 5,864 9 43 62 55 767 = Realized net income 5,677 -2 43 18 55 1,194 + Value of inventory change 165 -0 -12 2 -50 -24 = Total net income 5,842 -3 31 20 5 1,170 Source -

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