Mechanism of Legal Regulation of Agricultural Production Insurance as a Way to Ensure Food Security of the Country

Isakov Aleksandr Nikolaevich Doctor of Agriculture Professor, Department of Agronomy, Kaluga Branch of the Russian State Agricultural Academy named after K.A. Timiryazev 248007, Russia, Kaluga region, Kaluga, Vishnevsky str., 27 rogneda60@mail.ru

Most civilized countries of the world use a number of mechanisms to create favorable working conditions in agriculture that reduce the impact of adverse factors on the results of their economic activities. In the Russian Federation, one of the main mechanisms for protecting the property interests of agricultural producers from the negative impact of natural phenomena is production insurance. This ensures a certain financial stability and stability of economic entities and, undoubtedly, makes it possible to increase the country's food security.

An indisputable fact is an increase in the probability of the occurrence of insurance events as a result of adverse natural phenomena, which primarily negatively affects the functioning of agricultural enterprises and, especially, in the crop industry. The concept of the term "risky farming zone" has crossed the regional level and concerns most of the territories of Russia. This circumstance strengthens the responsibility of the state as a guarantor of ensuring food security of the population of the country.

The insurance protection of agricultural producers from adverse natural phenomena is carried out on the basis of the voluntary insurance mechanism stipulated in Federal Law No. 260-FZ dated 25.07.2011 "On State support in the field of agricultural insurance and on Amendments to the Federal Law "On the Development of Agriculture" (Collection of Legislation of the Russian Federation dated August 1, 2011 No. 31, Article 4700) (further-Federal Law No. 260).Property interests are subject to insurance in the event of loss or reduction of the yield of a legally defined list of agricultural crops, planting of perennial plantings, farm animals and aquaculture facilities.

Insurance protection is carried out on the basis of agricultural insurance contracts with state support, in which 50% of insurance premiums are paid by the agricultural producer. Insurance is carried out on the basis of uniform standard rules for each insurance program.

It should be noted that during the validity of Federal Law No. 260, many provisions of the law have changed. In the latest editions of Federal Law No. 260 (ed. dated 27.12.2018 No. 563-FZ, as amended. dated 12/30/2021 No. 475-FZ) largely takes into account the interests of the agricultural producer and provides:

- the ability to choose the most significant risks for production and the exclusion of unlikely ones, which significantly reduces the cost of insurance costs. This has reduced the criticism of researchers who pointed to the problem of differentiation of insurance tariffs, hindering the development of not only insurance, but also regional agricultural policy ^{[1, 2]}.

- the ability to set the real level of coverage, which reduces the cost of the insurance contract;

- the threshold for the death of the crop of agricultural crops and the harvest of perennial plantings, in which the case was recognized as insured, has been canceled. Federal Law No. 260 (as amended. from 12/22/2014 N 424-FZ) since 2016, insurance protection with state support has been provided only for the risks of loss and death of the crop harvest, or with a decrease in the actual harvest by 20% or more compared to the planned one and the loss of long-term plantings viability by more than 30% of planting areas. At the same time, the high limits of risk recognition reduced insurance payments to almost zero. Federal Law No. 260 (as amended. dated 27.12.2018 N 563-FZ) under the loss (death) of the crop has already provided for a reduction in the actual harvest compared to the planned loss of long-term plantings viability as a result of the occurrence of events stipulated by law. These criteria for the occurrence of insurance events increased the probability of receiving payments by agricultural producers.

- it became possible to make payments for any losses and on any area. The current version of Federal Law No. 260 in paragraph 13 of Article 2 provides for payments as a result of the loss (death) of the crop of agricultural crops, including the harvest of perennial plantations, as a result of a decrease in the actual crop of agricultural crops, including the harvest of perennial plantations compared with the planned harvest

on a land plot or part thereof as a result of the occurrence of all, several or one of the events provided for by law. Thus, the policyholder is dealing with multi-risk insurance;

- an expanded list of insurance natural phenomena leading to crop loss is provided. The current version of Federal Law No. 260 provides for insurance of the risks of loss (death) of the crop of agricultural crops, including the harvest of perennial plantings, loss (death) of plantings of perennial plantings from 26 types of natural phenomena and natural disasters, from the penetration and (or) spread of harmful organisms, if such events are epiphytotic in nature. The provisions of the first edition of Federal Law No. 260 applied to 21 types of natural phenomena and natural disasters;

- when insuring animals, an extended range of compensation for losses is provided in case of forced slaughter of all insured animals when an epizootic outbreak is detected;

- it is possible to take into account the specifics of the economy when assigning insurance amounts, the range of deductibles has been expanded (up to 50% of the insured amount);

- it became possible to conclude an insurance contract for at least 70% of the value of the crop yield, planting of perennial plantings, or animals;

- the possibility of using space monitoring data to confirm the facts of the occurrence of an insured event.

All this has simplified the ways to protect the interests of the agricultural producer.

In the first years of the Federal Law No. 260, villagers quite often faced a delay in the subsidies allocated to insure their production due to the inertia of federal and regional officials, excessive bureaucratization of the executive system, due to poor awareness of agricultural producers about the insurance program itself with state support.

Currently, the severity of the problems concerning the procedure for subsidizing agricultural producers and the mechanism of state support has weakened.

As the analysis of judicial practice in agricultural insurance shows, in most cases the courts take the side of the policyholder, however, it is not uncommon for insurers to fail to fulfill their obligations in the event of insured events, including as a result of intentional inclusion of unfavorable conditions for policyholders in contracts ^[3].

Agricultural producers are not clearly oriented in the details of the insurance mechanism, which imposes a certain responsibility on the authorized body of the subject of the Russian Federation, whose duties should be not only to launch the insurance mechanism with state support, but also to train the peasant in the main aspects of the insurance procedure, and further supervise this process.

This has led to the fact that the current level of the insurance system still does not allow us to talk about the use of agricultural insurance as a systemic institution for the development of agriculture. For example, in 2020, only 7% of agricultural crops were insured, instead of 20% planned by the Ministry of Agriculture.

It is obvious that the low coverage of agricultural crop insurance is not determined by the unwillingness of agricultural producers to participate in this process. This is due to a complex of problems in the agricultural sector, the main of which, in our opinion, are:

- the difficult financial situation of agricultural producers;

- lack of funds to pay 50% of the insurance premium, even taking into account government subsidies;

- high level of creditworthiness of the agricultural sector.

Some researchers still note the presence of "gray" schemes in the agricultural insurance industry, due to the lack of an accurate regulatory framework and insurance rules ^{[4, 5]}.

To break the financial impasse, comprehensive support for the agricultural industry is required by implementing many directions: establishing price parity between the cost of agricultural products and industrial means of production used in the agro-industrial complex, a well-thought-out system of measures to support the agricultural sector, etc.

Another burden for the state is the need to compensate for losses from natural emergencies that have become more frequent on the territory of the country (hereinafter referred to as natural emergencies). The state, trying to get away from the sole compensation of farmers' losses as a result of the occurrence of a natural emergency, includes agricultural producers in this process.

Federal Law No. 260 (as amended. dated 11.06.2021 No. 177-FZ) (hereinafter - FZ No. 177) from July 1, 2021 expanded the list of insurance risks, Clause 4 was added to Article 8, which provides for the possibility of insuring the risks of loss of crop yield and harvest of perennial plantings in case of an emergency of a natural nature.

It remains unclear whether the mechanism for providing subsidies to agricultural producers in case of natural emergencies will remain without concluding agricultural insurance contracts with state support?

According to the National Union of Agricultural insurers, at the cost of a multi-risk policy of 200-900 rubles per hectare, a natural emergency policy will cost 2-3.5 times cheaper, which is attractive for small farms. Given that a policy against natural disasters is able to compensate producers for only 35-50% of the cost of possible crop losses in crop production, multi-risk contracts are likely to be more profitable for large farms.

Analysis of the provisions of paragraph 19 of Article 2 of Federal Law No. 177 and the provisions of Federal Law No. 68- FZ of December 21, 1994 "On the Protection of the Population and Territories from Natural and Man-made Emergencies (Collection of Legislation of the Russian Federation of December 26, 1994, No. 35, Article 3648) (hereinafter - the Emergency Law)allows the concept of insurance risk "emergency of a natural nature" to be characterized as follows. As a result of a natural emergency, an emergency regime should be introduced. An event of a natural nature must at least meet the criteria of a dangerous natural phenomenon. Thus, it should develop according to the scheme: the fact occurred as a result of a natural event – this event should lead to crop loss - a federal, interregional or regional emergency regime has been declared. However, insurance contracts with state support in accordance with Federal Law No. 177 provide for covering the costs of natural disaster losses in a specific territory, in a separate farm, i.e. at the local level. This does not correspond to the concept of insurance risk "natural emergency" defined by the Emergency Law.

According to the Law on Emergencies, in order to determine the death of an agricultural crop from a natural emergency, the commissions for the prevention and elimination of emergencies are guided by the criterion of the economic feasibility of further cultivation of the crop. To date, it is unknown exactly what criteria will be established in the by-laws to determine the loss of crop yield, planting of perennial plantings for the risk of natural emergencies. Federal Law No. 260 imposes only the following requirements for determining the loss (death) of an agricultural crop " ... is established by the commission for the prevention and liquidation of emergency situations ... with the participation of the head of an agricultural organization, representatives of local self-government bodies; the loss is confirmed by an act drawn up by the policyholder and the insurer, or by the insurer based on the results of monitoring conducted using aviation and space facilities".

According to K. Svintsova ^[6] in recent years, in agricultural insurance, the judicial practice of applying conclusions on the fact of confirming the occurrence of insurance events according to remote sensing data has been formed. Whereas there are cases when, on the basis of the acts of the emergency commissions, the complete death of the insurance object was recorded, but upon careful study it turned out that the crops were unharmed or there was no loss of the planned harvest (The Decision of the Ninth Arbitration Court of Appeal of 27.09.2017 in the case N A40-168831/2016; The Decision of the Arbitration Court of the Moscow District of 10.09.2018 N F05-19087/2017 in the case N A40-204088/2016)(date of application:26.11.22)).When insuring crop production facilities and assessing their condition during the survey by the emergency commission, it is necessary to detail the territory of the farm with the indication of field numbers and links to geographical points.

This is necessary already at the stage of concluding insurance contracts.

The law enforcement practice on agricultural insurance still has facts when insurers unreasonably declare the occurrence of insured events and a decrease in the actual harvest of agricultural crops or the harvest of perennial plantings in comparison with the planned harvest. Along with an erroneous understanding of the insurance rules, criteria for the occurrence of insurance events, policyholders, in connection with the introduction of the insurance condition - a decrease in the actual harvest compared to the planned one, began to commit violations when calculating the level of the lost harvest. For example, the decision of the Arbitration Court denied the policyholder claiming to receive insurance payments for the risk of crop shortage due to the provision of inaccurate statistical reporting on the volume of harvested crops. This information was filled in by the policyholder himself without proper verification, including by the statistical authorities (the Decision of the Arbitration Court of the City of Moscow dated 14.06.2017 in case N A40-168831/2016) (date of appeal: 25.11.22)).Often the courts agree with the arguments of insurers about the need to apply contractual criteria for the occurrence of insured events, and not the criteria of Roshydromet.

At the same time, as it is often noted, the expert's conclusion cannot confirm the fact that the event meets the criteria established by the insurance contract, because the expert cannot influence the terms of the insurance contract, as well as the meteorological results (Resolution of the Arbitration Court of the North Caucasus District of 17.05.2017 N F08-2593/2017 in case N A53-1320/2016., Definition of the Supreme Courts of the Russian Federation dated 12.10.2015 N 308-ES15-12587) (date of appeal: 25.11.22)).It should be noted that the Ministry of Agriculture, being the main state body responsible for the country's Food security, is taking certain steps to stimulate insurance.

In particular, based on the Decree of the Government of the Russian Federation No. 118 of February 6, 2021, an additional coefficient of payments of increased rates per ton of manufactured products to agricultural producers who insured the harvest is introduced in 2023 (http://ivo.garant.ru/#/document/404520374/paragraph/1/doclist/2607 /) (accessed: 12/24/12)). In animal husbandry, the subsidy for 1 kg of sold milk for insured livestock is increased.

Thus, in conditions of increasing natural and climatic instability in the field of agricultural production, it is difficult to find an alternative to the insurance system to create a certain financial guarantee for producers and food security of the country. Legal regulation of the mechanism of the insurance system aimed at expanding insurance products, insurance of the most likely risks, increasing the responsibility of the authorized body of the subject of the Russian Federation for informational, advisory and legal support of contracts will contribute to the expansion of agricultural insurance in the country.