This regulatory bill amends the current agricultural insurance system, allowing the use of additional funds to complete national budgetary resources, so that new instruments can be created and put in place to manage risk in the agricultural sector.

The Bill seeks to amend the target of agricultural insurance and the type of insurance, to include additional areas of cover and to expand the sources of funding for the National Agricultural Risk Fund.

The proposed amendments are summarized below:

Target of the insurance

• Current legislation: agricultural investments based on funds received from the National Agricultural Lending System or the producer's own resources
• Proposal: all or some of the agricultural investments based on funds received from the National Agricultural Lending System or the producer's own resources: the producer's opportunity cost; expected income

Type

• Current legislation: no provision
• Proposal: parametric or by indicator - indemnity is payable if an indicator is reached, without taking into account the real loss assessment at the time of the claim, but instead a fixed sum predetermined in the policy

Cover

• Current legislation: Ministry of Agriculture and Rural Development (MADR) will regulate the cover - natural or biological risk
• Proposal: MADR will regulate cover (natural or biological risk) and additional cover (associated with transport risk, selling, theft or death of animals, among others) inherent to agricultural activity.

Target of the National Agricultural Risk Fund

• Current legislation:  no provision
• Proposal:  to provide resources for the reinsurance of agricultural insurance; to subsidize insurance premiums for producers, when approved by the National Agricultural Lending Commission; to grant subsidies, support and incentives to implement risk management instruments in the agricultural sector, among others

National Agricultural Risk Fund resources

• Current legislation: percentage of the National Government's profits from mixed economy companies and the State's industrial and trading firms, as regulated by the National Government; profits from the  National Agricultural Risk Fund
• Proposal:
  • A minimum of 2% of the National Government's profits in mixed economy companies and the State’s industrial and trading firms, both financial and non-financial, as regulated by the National Government in the COMPES document on profit distribution
  • No less than 15% of the gross profits from every annual period the Banco Agrario ends; percentage set by the Banco Agrario's Board of Directors
  • Contributions from public or private institutions through agreements or transfers
  • Reimbursable and non-reimbursable resources from national, international and multilateral institutions
  • Other resources allocated to any title

Parties receiving agricultural and fisheries parafiscal contributions

• Current legislation:
  • Technology research and transfer, technical advisory and assistance.
  • Adaptation of production and  health & safety monitoring.
  • Organization and development of sales infrastructure and channels.
  • Promotion of exports and consumption.
  • Support for regulations on supply and demand to protect producers against excessive price fluctuations and ensure their revenues.
  • Economic, social and infrastructure programs of benefit to respective sub-sectors.
• Proposal: in addition to the above, the following have been added:
  • Installation, operations, maintenance and automation of the national network of weather stations located in agricultural areas, with the technical specifications established by IDEAM, the Institute of Hydrology, Meteorology and Environmental Studies.
  • For the payment of agricultural risk management instruments, including agricultural insurance.