IDEAS home Printed from https://ideas.repec.org/a/eee/agisys/v225y2025ics0308521x25000290.html
   My bibliography  Save this article

The subsidy-mosaic for agricultural weather insurance in Germany

Author

Listed:
  • Schmitt, Jonas
  • Offermann, Frank
  • Finger, Robert

Abstract

The subsidisation of agricultural weather insurance is gaining momentum in European agriculture, with the aim of increasing farmers' self-responsibility and eliminating the need for ad hoc disaster payments. The implementation and design of agricultural weather insurance subsidies vary considerably from country to country. We show here that in Germany there are even fundamental differences within the country due to the different weather insurance subsidy schemes of the federal states. For example, some federal states do not subsidise weather insurance, and other federal states that do subsidise weather insurance, differ in which crops or perils are supported. This insurance subsidy mosaic increases inequality across farms and is likely to increase the cost of insurance. In addition, small federal-state-specific insurance markets are less attractive to insurance companies, which has a negative impact on competition among insurance companies and innovation in insurance products. We conclude that harmonised approaches to insurance support that incentivise on-farm risk management and adaptation to climate change are needed.

Suggested Citation

  • Schmitt, Jonas & Offermann, Frank & Finger, Robert, 2025. "The subsidy-mosaic for agricultural weather insurance in Germany," Agricultural Systems, Elsevier, vol. 225(C).
    • Handle: RePEc:eee:agisys:v:225:y:2025:i:c:s0308521x25000290
    DOI: 10.1016/j.agsy.2025.104289
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0308521X25000290
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.agsy.2025.104289?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Robert Finger & Nadja El Benni, 2021. "Farm income in European agriculture: new perspectives on measurement and implications for policy evaluation," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 48(2), pages 253-265.
    2. Keith H. Coble & Barry J. Barnett, 2013. "Why Do We Subsidize Crop Insurance?," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 95(2), pages 498-504.
    3. Barry K. Goodwin, 2001. "Problems with Market Insurance in Agriculture," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 83(3), pages 643-649.
    4. Jonas Schmitt & Frank Offermann & Andreia F. S. Ribeiro & Robert Finger, 2024. "Drought risk management in agriculture: A copula perspective on crop diversification," Agricultural Economics, International Association of Agricultural Economists, vol. 55(5), pages 823-847, September.
    5. Nadja El Benni & Robert Finger & Miranda P.M. Meuwissen, 2016. "Potential effects of the income stabilisation tool (IST) in Swiss agriculture," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 43(3), pages 475-502.
    6. Barry Smit & Mark Skinner, 2002. "Adaptation options in agriculture to climate change: a typology," Mitigation and Adaptation Strategies for Global Change, Springer, vol. 7(1), pages 85-114, March.
    7. Schmitt, Jonas & Offermann, Frank & Söder, Mareike & Frühauf, Cathleen & Finger, Robert, 2022. "Extreme weather events cause significant crop yield losses at the farm level in German agriculture," Food Policy, Elsevier, vol. 112(C).
    8. H. Holly Wang & Hao Zhang, 2003. "On the Possibility of a Private Crop Insurance Market: A Spatial Statistics Approach," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 70(1), pages 111-124, March.
    9. Jayson L. Lusk, 2017. "Distributional Effects of Crop Insurance Subsidies," Applied Economic Perspectives and Policy, Agricultural and Applied Economics Association, vol. 39(1), pages 1-15.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Fabio G Santeramo, 2019. "I Learn, You Learn, We Gain Experience in Crop Insurance Markets," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 41(2), pages 284-304, June.
    2. Vigani, Mauro & Khafagy, Amr & Berry, Robert, 2024. "Public spending for agricultural risk management: Land use, regional welfare and intra-subsidy substitution," Food Policy, Elsevier, vol. 123(C).
    3. Zhiwei Shen & Martin Odening, 2013. "Coping with systemic risk in index-based crop insurance," Agricultural Economics, International Association of Agricultural Economists, vol. 44(1), pages 1-13, January.
    4. Zhiwei Shen & Martin Odening & Ostap Okhrin, 2016. "Can expert knowledge compensate for data scarcity in crop insurance pricing?," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 43(2), pages 237-269.
    5. Ostap Okhrin & Martin Odening & Wei Xu, 2013. "Systemic Weather Risk and Crop Insurance: The Case of China," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 80(2), pages 351-372, June.
    6. repec:hum:wpaper:sfb649dp2013-030 is not listed on IDEAS
    7. Wei Xu & Guenther Filler & Martin Odening & Ostap Okhrin, 2010. "On the systemic nature of weather risk," Agricultural Finance Review, Emerald Group Publishing Limited, vol. 70(2), pages 267-284, August.
    8. Simone Severini & Cinzia Zinnanti & Valeria Borsellino & Emanuele Schimmenti, 2021. "EU income stabilization tool: potential impacts, financial sustainability and farmer’s risk aversion," Agricultural and Food Economics, Springer;Italian Society of Agricultural Economics (SIDEA), vol. 9(1), pages 1-21, December.
    9. Xiaotao Li & Jinzheng Ren & Beibei Niu & Haiping Wu, 2020. "Grain Area Yield Index Insurance Ratemaking Based on Time–Space Risk Adjustment in China," Sustainability, MDPI, vol. 12(6), pages 1-15, March.
    10. Zhifeng Zhang & Haodong Xu & Shuangshuang Shan & Qingzhi Liu & Yuqi Lu, 2022. "Whether the Agricultural Insurance Policy Achieves Green Income Growth—Evidence from the Implementation of China’s Total Cost Insurance Pilot Program," IJERPH, MDPI, vol. 19(2), pages 1-20, January.
    11. Möhring, Niklas & Dalhaus, Tobias & Enjolras, Geoffroy & Finger, Robert, 2020. "Crop insurance and pesticide use in European agriculture," Agricultural Systems, Elsevier, vol. 184(C).
    12. Ozaki, Vitor & Campos, Rogério, 2017. "Reduzindo a Incerteza no Mercado de Seguros: Uma Abordagem via Informações de Sensoriamento Remoto e Atuária," Revista Brasileira de Economia - RBE, EPGE Brazilian School of Economics and Finance - FGV EPGE (Brazil), vol. 71(4), December.
    13. Tsiboe, Francis & Turner, Dylan, 2023. "The crop insurance demand response to premium subsidies: Evidence from U.S. Agriculture," Food Policy, Elsevier, vol. 119(C).
    14. Nordmeyer, Eike Florenz & Danne, Michael & Musshoff, Oliver, 2023. "Can satellite-retrieved data increase farmers' willingness to insure against drought? – Insights from Germany," Agricultural Systems, Elsevier, vol. 211(C).
    15. A. Ford Ramsey & Yong Liu, 2023. "Linear pooling of potentially related density forecasts in crop insurance," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 90(3), pages 769-788, September.
    16. Ming Wang & Tao Ye & Peijun Shi, 2016. "Factors Affecting Farmers’ Crop Insurance Participation in China," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 64(3), pages 479-492, September.
    17. Martínez-Salgueiro, Andrea & Tarrazón-Rodón, María-Antonia, 2020. "Is diversification effective in reducing the systemic risk implied by a market for weather index-based insurance in Spain?," MPRA Paper 119924, University Library of Munich, Germany, revised 19 May 2021.
    18. Feng, Xiaoguang & Hayes, Dermot, 2014. "Is Government Involvement Really Necessary: Implications for Systemic Risk and Crop Reinsurance Contracts," 2014 AAEA: Crop Insurance and the 2014 Farm Bill Symposium: Implementing Change in U.S. Agricultural Policy, October 8-9, 2014, Louisville, KY 184241, Agricultural and Applied Economics Association.
    19. Mauro Vigani & Jonas Kathage, 2019. "To Risk or Not to Risk? Risk Management and Farm Productivity," American Journal of Agricultural Economics, John Wiley & Sons, vol. 101(5), pages 1432-1454, October.
    20. Du, Xiaodong & Hennessy, David & Feng, Hongli, 2014. "Tail Dependence is to be Expected Among Crop Yields," 2014 Annual Meeting, July 27-29, 2014, Minneapolis, Minnesota 174315, Agricultural and Applied Economics Association.
    21. Dadang Jainal Mutaqin & Koichi Usami, 2019. "Smallholder Farmers’ Willingness to Pay for Agricultural Production Cost Insurance in Rural West Java, Indonesia: A Contingent Valuation Method (CVM) Approach," Risks, MDPI, vol. 7(2), pages 1-18, June.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:agisys:v:225:y:2025:i:c:s0308521x25000290. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/agsy .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.