Design Principles for Agricultural Risk Management Policies
Publicly supported agricultural insurance programmes have grown rapidly in popularity over the past 20 years among OECD countries, as well as large emerging economies such as China and India. Large insurance programmes exist in Japan and Canada and many European countries like Spain, France and Italy. Agricultural insurance programmes are also growing in Latin America, including in Chile, Colombia, Brazil and Mexico.
Some countries dedicate a large proportion of their expenditures on agriculture toward risk management instruments. In particular, from 2017 to 2019, Australia, Canada, and the United States all directed more than 30% of their producer support to risk management tools. The overwhelming share of Australia’s risk management assistance comes from its
Farm Management Deposit Scheme and tax averaging programme; Canada’s support is split between insurance, income and revenue stabilisation and tax and savings measures; while support in the United States over that period was largely focused on insurance and ad hoc assistance for economic shocks.
Over the same period, Brazil spent 15% of producer support on insurance programmes. Surprisingly, although China is the second largest spender on risk management tools, those expenditures amounted to less than 5% of its total producer support in 2017-19.