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.

Keywords

• agriculture
• risk management
• indemnification
• income stabilisation tool
• cap