Crop insurance – a risk management tool on the farm!

The 2020 season was marked by stormy weather with heavy rainfall and hail damage. The period of major losses began shortly before the summer solstice in Latgale, when hail tore through still green cereal and rapeseed fields, causing farmers to lose as much as 80% of crop. At the end of June, we experienced heavy rain and in July, hail, which damaged large areas in Zemgale. When assessing the losses, a total of 24.5 thousand ha were surveyed.

In 2020, Vereinigte Hagel (hereinafter – VH Latvija) has applied for and paid out compensation in the amount of more than 4 million euros. The largest compensation within the framework of one farm is more than 400 thousand euros.

Vita Baumane, Head of Volume Insurance at LATRAPS, shares her experience and insights about the volume insurance situation in Latvia:

Understanding of insurance and risk management in Latvia still needs to be increased.

A large part of society believes that if you fail to recover what you paid for the policy from the insurer, then it has been a failed transaction. If we insure our house, health or life, do we expect that the insured event will actually occur? In a study conducted by VH Latvija, 100% respondents answered affirmatively that adverse weather conditions significantly affect the crops on their farms. Why is it so difficult to make a decision to insure your main source of income, especially if the farm has credit obligations and savings are invested in development and there are no other “safety cushions”? Insurance should be viewed as an investment in security, security and support for the most undesirable situation.

1. We cannot do without state support!

Crop insurance differs from other types of insurance in that the insured object changes from year to year, has a relatively short insurance period, and has a high probability of occurrence of the insured risk or even a set of risks. For these reasons, crop insurance requires a larger investment than other types of insurance. This is also the reason why the type of insurance is able to exist only with support mechanisms from the state.

2. Myths about weather conditions, their damage and possible risks.

Myths and beliefs about weather damage exist, but each of them can be easily refuted with facts.

"Everything never goes hungry!"

The statistics for winter crops in the spring of 2014 are harsh, with 901,300 hectares of sown area in Latvia frozen.

“Hail can’t hurt crops!”

In 2017, photos from a loss survey in Germany showed crop stalks with ears of grain broken off. Starting in 2019, this is also a reality in rural Latvia.

"The storm clouds always come at a curve for my farm!"

As processes in nature change, the real situation also changes. A year ago, Elvis Lazdiņš, a representative of VH Latvija members and owner of SIA “Latvijas Grauds”, could not comment on the losses caused by weather conditions. The situation this year is completely different. He has been insuring the potential harvest since the beginning of the farm's operations, because being nervous about possible vagaries of nature without insuring the crops is both emotionally and financially disadvantageous.

"My fields were damaged by heavy hail this year, knocking down approximately 70-80% pods. It's sad that a year's work can be ruined by the vagaries of nature in two minutes."

Benefits of taking out insurance through VH Latvija:

Now is the right time to think about winter crop insurance against adverse wintering conditions!

The last few winters have been quite favorable, but we haven't been completely without losses either. However, there are cycles in nature - who can say what the upcoming winter will be like?

We invite you to insure your volumes with VH Latvija now!

Insurance applications can be submitted electronically – https://ej.uz/LATRAPS-apdrosinasana