Insurance In Agriculture Of Serbia As Precondition Of Risk Minimization

Due to its specific nature agriculture is exposed to a number of risks, whose emergence could lead to the losses in production as well as volatility in the business. The risks can not be completely eliminated, but they can be managed and their impacts can be minimized. Insurance could have the most important role in minimization of risk. Insurance is a form of risk management used to limit potential losses. Insurance in agriculture includes crop and fruit insurance, but also insurance of livestock, domestic and wild animals, buildings and machinery, and can be applied in greenhouses, forestry and aquaculture as well. Insurance in Serbian agriculture is undeveloped. The share of the crop insurance and the animal insurance premiums was only about 2.6% of the total non-life insurance premiums in 2011. In Serbia it has been insured only about 3% of registered farms and 8-10% of the cultivable land areas. It is common practice that governments around the world take an active role in subsidizing agricultural insurance. Since 2006 Serbian government has also introduced the subsidizing of insurance premiums in the case of animals, crops and fruits insurance (in 2006 and 2007 by 30%, while since 2007 onward by 40%). Some local governments subsidize additional 10% of premium. These incentives have not led to the increased interest of farmers to ensure their production and fixed assets. By utilization of the desk research method it has been analyzed the general situation of agricultural insurance in Serbia, together with comparative analysis of the situation in Serbia with the one in the neighboring countries and EU. On the basis of the case study method for 100 family farms belonging to the municipalities of the Belgrade city, there have been analyzed the following parameters: presence of the crop and fruit insurance at the family farms, the types of risk from which the farmers usually insure their crops and fruits, the success of getting fee for damages caused by the insured events, the reasons why insurance is not present in the larger extent in Serbian agriculture and what are the possibilities for greater use of insurance as the safest form of minimization the potential risks in agriculture. The authors have also discussed a possibility of introducing the mandatory insurance for agricultural production, as well as the participation in agricultural insurance of those stakeholders which have interest for greater use of insurance in Serbian agriculture (insurance companies, food processing companies, banks, veterinary and extension services, local government authorities etc).