Azerbaijan expands agricultural insurance amid rising climate risks

As the frequency of natural disasters increases globally, Azerbaijan is boosting its agricultural insurance system to shield farmers from climate-related losses.

According to the World Bank, the number of major natural disasters has risen from 250 to 950 annually between 1980 and 2020. In April, Turkey lost 120,000 hectares of vineyards to severe frost, with damages reaching 1 billion manats.

Azerbaijan also faced weather-related losses this spring due to heavy rains and floods. The Agricultural Insurance Fund (ASF) received over 120 claims from nearly 30 regions. In the Khachmaz district, rains and frost severely damaged orchards. ASF has committed to covering all insured damages.

In April alone, insured damages reached 13 million manats; since the start of the year, the total stands at 26 million, double last year’s figure. In 2024, ASF paid a record 6.4 million manats, compared to 4.4 million in 2023 and 2.4 million in 2022.

The area of insured farmland grew to 447,000 hectares, with 56,662 contracts signed this year. Insurance now covers 96% of agricultural output, with 30% of total farmland insured — a sharp rise from zero just a few years ago.

ASF's assets increased from 9 million to 30 million manats, and its risks are reinsured through major international institutions. However, mistrust in insurance persists despite 50% state subsidies. ASF cited a recent case where a farmer in Agjabedi lost an uninsured crop worth 45,000 manats, while the insurance would have cost only 500.

Some farmers misreport expected yields in the state database, reducing potential payouts. ASF coverage includes hail, floods, earthquakes, and even animal damage.

Established in 2019 by presidential decree, ASF introduced a nonprofit insurance model where profits are not redistributed but reserved for large-scale disasters. The system is now being adopted by Uzbekistan, which passed its own agricultural insurance law in April following a study visit to Azerbaijan.

N.Tebrizli