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A plenary session of the Parliament of Georgia was held on 14 November 2014 where the Minister of Finance of Georgia, Nodar Khaduri, presented the 2014 State Budget project. Whilst speaking about the planned projects in the field of agriculture, the Minister stated: “The Agro Insurance project’s funding will continue. A total of 15,000 beneficiaries are involved in the Agro Insurance project as of 1 November 2014 and the total value of the insured risks equals GEL 150 million.”

FactCheck

took interest in this statement and looked into the Agro Insurance project.

The Agro Insurance project was enacted from 1 September 2014. This is a pilot project, planned to operate for one year. The project aims to actively include the insurance system in the field of agriculture. The Agricultural Projects Management Agency is in charge of the project’s coordination.

Directive No. 1462 of the Government of Georgia determined the actions and budget necessary to implement the Agro Insurance project. The overall budget of the project equals GEL 5 million. The conditions of insurance are as follows: a total of 70%-90% or, in some cases, even 95% of the insurance package will be covered by the state whilst the farmer, user or any other person using the insurance will pay, according to certain scales, over 0,5% of the insurance. Whilst subsidising the insurance package, the state covers a maximum amount of GEL 30,000 in the case of an individual whilst covering GEL 50,000 in the case of agricultural cooperatives. All sorts of agricultural products will be insured by the project. This includes insurance from natural disasters such as hailstorms, excessive precipitation, storms and autumn frost. The project only insures the plots of land which have cadastral codes, maps and/or GPS coordinates. It should be noted that the insurance does not cover damage caused by droughts.

Insurance companies licensed in Georgia expressed their wish to participate in the Agro Insurance project. On 1 September 2014, a memorandum of cooperation was signed between the Agricultural Projects Management Agency and the following insurance companies: GPI Holding, Aldagi, IC Group, Irao and Cartu. The insurance companies agreed to sign contracts with farmers taking part in the insurance project. The insurer is obligated to pay a part of the insurance bonus upon the issuance of the insurance policy. The rest of the insurance bonus will be paid by the Agency.

FactCheck

requested information about the Agro Insurance project from the Agricultural Projects Management Agency. According to their data, a total of 15,423 hectares of land has been insured in terms of the project as of 17 November 2014 whilst the number of the beneficiaries is about 16,500. The insurance limit amounts to GEL 150 million which means that the total value of the insured risks is about GEL 150 million. According to the Agency, farmers actively cooperated with the Agency in order to insure their harvest. The whole amount of GEL 5 million, allocated by the government for the project, has already been used up. Hence, the budget of the project has increased and amounted to GEL 11,101,329. The project will continue next year as well.

We asked Giorgi Gigolashvili, Head of the Insurance Institute, an NGO, to comment upon the Agro Insurance project. He stated: “The field of agricultural risks insurance has never been created in any developed countries without the interference of the state. The state shares the agricultural risks with the insurance companies. As of today, the insurance market in the field of agriculture is virtually unused and the activity of the insurance companies is very low because they cannot get income. According to the data of 2013, agricultural insurance constituted only 1% of the property insurance. This is a very low share. We will only be able to talk about the success of the Agro Insurance project after a year based upon the benefits the farmers and the insurance companies get.”

Conclusion

The Agro Insurance project was enacted as a pilot beginning on 1 September 2014. The project enables farmers to insure their harvest against natural disasters. The state subsidises from 70% to 95% of the insurance package. According to the data of the Agricultural Projects Management Agency, a total of 15,423 hectares of land has been insured in terms of the project as of 17 November 2014 whilst the number of the beneficiaries is about 16,500. State funding amounts to GEL 11,101,329. The initial budget of the project equalled GEL 5 million but given the growing interest of the farmers, it has been increased.

Based upon the aforementioned facts, Nodar Khaduri’s statement: “A total of 15,000 beneficiaries are involved in the Agro Insurance project as of 1 November 2014 and the total value of the insured risks equals GEL 150 million,” is TRUE.