Farming insurance



Case Study Contents

About Farm

Farm Name

Promoter:Cristina Carrillo
(COAG Jaén Insurance Responsible)
Farmer: Dolores Valderrama López
Initiative: Agroseguro.

Year of foundation



Cazalilla, Jaén

Farm area/size of the organisation:

3.5 ha

Number of workers:

Family members and 8 seasonal workers.

Farm main activity:


Climate and soil characteristics

Expansive clays and continental climate of the Guadalquivir valley, with hot summers and dry winters. 400 mm of rainfall, decreasing year by year, with episodes of storms and hail.

Measure Information

Description of the measure

Agricultural insurance is a risk coverage resource available in the Spanish agricultural sector. The insurance has a public component, with Agroseguro being the managing institution at the national level.

The insurance has several systems of coverage. The yield insurance we are analysing in this case seeks to guarantee up to 75 % of the historical yields associated with a farm. This farm has a risk premium linked to the region to which it belongs, and this risk defines the price to be paid per hectare by the farmer who takes out the insurance.

Objective of the measure

The purpose is to guarantee incomes when an adverse weather event reduces the yield of a farm.

For harvest reductions below the reference yields of that farm, the farmer may report damages, charging the difference between 75% of the reference yield and the yield finally obtained, with a reference price of 30 cnt/kg (in 2014).

Justification of the choice

The farmer decided to take out insurance in 2014. Their rainfed plantation had a strong yield that year, which together with a warm and dry winter made them anticipate a low harvest the following year.

They took out the insurance in winter and in spring a heatwave damaged the flowering of the province of Jaén, making it the year with the lowest provincial production in the last decade.

Where did You get information of the measure from?

Information on insurance can be consulted directly on the Agroseguro website.

Agrarian insurance is distributed through multiple institutions: insurance brokers, financial institutions, cooperatives, and agricultural associations.

These agents provide information, advice, and insurance processing.

Description of the situation before the measure implementation

This example describes a rainfed olive grove with wide variations in production (the “vecería”). This productive alternation is due to variations derived from climatic cycles, management under a non-irrigated system and the variability of the olive tree itself as a specie.


Stakeholders involved

Agricultural organisations, insurance brokers, cooperatives, financial institutions.

Description of stakeholders’ role

COAG Jaén, like other agricultural insurance intermediaries, offers information, training, advice and processing of Agroseguro policies.

The offered services include the preparation of yield calculations, the preparation of budgets and the identification of the module that best suits the farm.

Implementation phase

Description of the survey done for the implementation

In the decision-making process, it is necessary to assess the characteristics of the farm in order to decide which type of insurance module to take out. Some of the criteria to consider are annual or biannual coverage, plot or farm level coverage, damage or yield coverage, etc.

Costs for the implementation

The current cost is around €50/ha. It is the result of applying a 75% subsidy from public funds, which is also included in the tax return.

This cost can be reduced in successive contracts through bonuses and discounts, the aim of which is to ensure the loyalty of farmers who enter the insurance system.

Utilization of subsidies

75% subsidy from public funds.

Implementation / building

Registration in the CIAS database of the Ministry of Agriculture is needed, so that a starting yield is assigned, which is the reference for all calculations.

The insurance is taken out by adjusting the contract parameters: duration, % coverage, plot or farm scale, etc.

In case of an expected low production, the farmer has to inform Agroseguro, which assesses the impact and applies the compensation.

Required maintenance operations

Benchmarks may vary over time. The recalculation of reference yields can be requested to adjust the values upwards. The reference prices, which are published in the BOE (Official State Journal) by Agroseguro, are adjusted. And the risk premiums associated with each farmer are updated based on their contracting and claims history.

Recommended knowledge / skills / training / courses / education desired before starting the measure implementation

The system is complex due to the number of modules, coverages and the insurance operation.

It is essential to make knowledge accessible and to adapt the best options to each farm. Case studies, simulations and positive experiences are useful for this purpose.

Ideally, farmers should be able to define their own scenarios, based on a whole understanding of the system.


With 0 yield, the insurance guarantees up to 75% with an excess of 10% and a reference price of 30cnt/€ (in 2014). In the case of Dolores, their reference yield for 350 trees was 56kg/tree. Considering 0kg of production, the result was:

350 trees x 56kg/tree (reference yield) x (75% coverage – 10% excess) x 0,3€/kg = €3.969 €.

Reduces uncertainty and sustains income, buffering poor harvest years. For agricultural regions the economic and social impact could be very important with a higher penetration of contracting.

It is a balanced system for the current climatic situation in Spain, but the evolution of climate change and its impacts in the medium and long term raises questions.

In a dynamic of recurrent droughts, an entry of many farmers into the system with massive claims would attack its sustainability.


Innovation elements

Agrarian insurance is a success story of the Spanish agricultural system, an innovative method with a long tradition, in constant evolution, which seeks a balance in order to better adapt to the needs of farmers.

Key element for success

  • High plot yields.
  • Productive regions.
  • Farm homogeneity.
  • Continuity in contracting.
  • Professional farmers.
  • Select best moments to report damages.
  • Use your own experiences and do not rely on the opinions of third parties.
  • Configure insurance parameters to the reality of the farm.


Physical constraints

  • The calculation of yields is not always accurate in terms of performance, planting frames, age of planting, etc.
  • Prices are perceived by farmers as expensive.
  • Contracting deadlines come before the end of the previous harvest, which in some cases makes it difficult to forecast climatic impacts.

Technological constraints

  • Systems are complex; their understanding and contracting conditions are not always understood by farmers, which discourages many of them.
  • The administrative and bureaucratic side is complex and mistakes in processing can lead to problems in compensation claims.

Acceptance constraints

  • The system discourages farms with low reference yields or small farms.
  • The bad experiences of some farmers discourage others from taking out insurance.
  • Despite being an essential tool, only 1% of farmers take out insurance.

Proposed solutions to above constraints

  • Agroseguro is making an effort to adjust the model to the needs of farmers, but there are sectors such as olive groves that need to achieve a better balance.
  • The adjustment of reference yields and a better knowledge on the part of farmers are fundamental factors for a better future implementation.

Lesson learned

Farmers’ experiences

Dolores and her family were satisfied, as they compensated for the loss of harvest while maintaining their income. Given this experience, they continue to take out insurance annually, enjoying better calculations and the bonuses due to continuity in the system.


“You need to be guided by your own experiences rather than by others”.

Measure sustainability

Economical sustainability

The economic sustainability of the agricultural sector in regions with drought cycles and production variability will be based on the contracting of risk management tools.
There are many challenges that the insurance system must face in order to increase its penetration in certain sectors or farms.

Transfer of the measure

Replicability conditions required

  • Professional farmers
  • High average yields
  • Economic dependence on agriculture
  • Decision making based on simulations and scenarios
  • Knowledge of measurement and evaluation protocols
  • Regions with high averages (conditions initial assessment)
  • Permanence in the system

Additional Required Conditions for spreading the measure

  • It is aimed at professional farmers with high production averages, whose income depends on agriculture and are compensated in the medium term.
  • It should be carried out based on simulation exercises and working with scenarios.
  • Measurement and evaluation based on protocols and historical data.
  • Farmers with high regional averages that initially condition the entry into the system.
  • The calculation of reference yields is fundamental. They are usually better adjusted for farmers with a background in the system than for new entrants.

The system is managed by public entities that depend on the Ministry of Agriculture. There is strong government support for this model of agricultural insurance. It would be necessary to set up these public agencies and generate the necessary budget to build the system. The aim is not to reward profit but to create a system in which some crops and regions compensate others, with a net result of the system that does not generate a deficit.

Conclusion remarks

Climate change makes necessary to integrate agricultural insurance as a managing tool to reduce risk on farms.
The complexity of the system and its constraints discourage many farmers from taking it out. A review of the model is needed to generate a more balanced system.
Increased dissemination and training should improve penetration in the sector.

Future plans

From Dolores’ point of view, taking out insurance has become an important tool, which continues to be taken out.
From Agroseguro’s point of view, changes to its system are expected soon, and it is making a great effort to adapt to the needs of the farmers.

Open problems

The system of contracting and benchmark crop assessment discourages many farmers. For some, it is perceived as expensive insurance.
It generates more interest among professional farmers with high average yields in productive regions.
Greater dissemination and training are needed.


“Obtaining information and advice from the system is needed to integrate it as a management tool”.

“You need to be guided by your own experiences rather than by others”.


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