During next years, European farms probably will have to face with an increasing instability of their incomes. Farmers will be more and more exposed to risks related to prices and to climate change.
Risks related to prices variability were minimized up to now by the EU thanks to markets and prices support policies. Today, the progressive diminution in agricultural subsidies and the suppression of guaranteed prices expose the European agriculture to the uncontrolled evolution of the world market prices.
As a result of climate change, climatic risks tend to increase with the multiplication of extreme climatic events (droughts, heat strokes, violent rains, storms), inducing greater yield variations. Farms specialization increases their sensitivity to climatic risks and reinforces the need for improving revenue protection mechanisms.
In this context, a better natural risks management is needed, because combined with the prices risks, they can generate significant incomes risks.
A recent regulation of the European Commission (1857/2006) makes possible for member states to compensate farmers for losses caused by adverse meteorological conditions which can be assimilated to natural disasters. It proposes the use of agricultural insurances to supplement the state Disaster Funds.
In Belgium , some agricultural risks are covered by the Disaster Funds . The Federal Minister of Economy, Independent Professions and Energy, which is in charge of its management, wishes to improve the system in order to guarantee a better reactivity in case of crises and to increase efficiency in the claims management. In particular, it would like to decrease time in the disaster identification procedure, to facilitate the eligibility of the compensation demands, to ensure a uniformity in the claims treatment and in the estimate of losses, and finally to reduce the payment delay.
By improving the management of the Disaster Fund procedure, and by implementing a specific decision support system , public authorities will also offers opportunities for new policies development by supplying yield risks information to the Belgian insurances sector . The supply of reliable historical crop data, making it possible to define risk levels, will facilitate a successful implementation of new tools and the development of new crop insurance products.