The Potential Indemnification of Slovak Farmers with the Income Stabilisation Tool

Abstract

The risk management tools in agriculture enable farmers to anticipate, avoid and react to shocks and agricultural risks. The Common agricultural policy includes mechanisms to support risk management of the European farmers and respond to crises. An ambition of the recent CAP proposal is to increase the focus on risk management and stabilisation of farmers′ income. Under Pillar 2, the CAP offers the support for less favoured farms, which have experienced the production or income loss in the way of insurance premium, mutual funds, and Income stabilisation tool. However, only few European countries have been using these tools operationally. The risk management tools were subjected to criticism, mainly because of many obstacles in their implementation; therefore, since 2018, the risk management toolbox has been further extended. In the paper, we focus on one of the CAP tools from Pillar 2, the Income Stabilisation tool, and examine the potential effect on farmers′ indemnification in Slovak agriculture.

The Role of Cap Risk Management in Income Stabilisation: Empirical Evidence of Ist in Slovakia

“…The results are presented in Table 2. (Source: own processing, adjusted from Boháčiková et al (2020) It is not possible to take into account the costs of establishing the Income stabilisation tool fund, as well as the initial contribution of participating farmers. The European Commission allows the Member States to create the own rules in the implementation of the risk management tools to the national policies.…”

“…The main objective of the paper is to evaluate the income instability of Slovak farms in the years 2012 -2017, and the calculate the potential indemnification for Slovak farmers with the use of the Income stabilization tool of CAP. The paper is the further extension of the study Boháčiková et al (2020).…”

“…(Source: own processing, adjusted from Boháčiková et al (2020), value of indemnification expressed in EUR) The 70 % indemnification, more than 20 % loss The 70% indemnification, more than 30 % loss Total indemnification…”