Comparing agricultural insurance in the USA-Spain and Türkiye

Agriculture is naturally a risky sector. Most important of these risks are adverse meteorological risks that cause yield and quality losses and price risks that affect farmers' income. Although farmers try to mitigate the effects of the risks they face with financial, technical, and cultural measures, they are helpless against the destructiveness of risks that have systemic characteristics. In particular, family businesses, which are the backbone of agriculture, may disconnect from agricultural activities if the losses they incur are not compensated in a timely and effective manner due to their insufficient financial capacity. In the medium and long term, this negatively affects all stakeholders in the food value chain and disrupts sustainable agricultural production. For this reason, agricultural insurance has emerged as a modern risk management tool used to transfer risks on producers to financial markets all over the world, but at the same time the private insurance sector has remained insufficient in this field due to the unique structure of agriculture and the systemic characteristics of the risks encountered. Due to the inadequacy of the private sector in transferring risks in agriculture, governments started to intervene in this field and state supported agricultural insurance systems were developed in several countries. One of these countries is Türkiye, having established a unique state supported agricultural insurance system with the Agricultural Insurance Law enacted in 2005. However, while some of the different types of state supported agricultural insurance systems that started to spread around the world in the 20th century were successful, others failed. In this context, this study analyzes the state supported agricultural insurance systems that have been successfully implemented in the USA and Spain for many years, risk transfer mechanisms, stakeholders' roles, and insurance products, and compares them with the model implemented in Türkiye, and provides recommendations that can be taken to increase the penetration rate of state-subsidized agricultural insurance in Türkiye.