Agricultural production is associated with a variety of risks, including market, institutional, and production risks. An important production factor in agriculture is the weather. Its uncontrollable nature makes weather risk the prevailing risk to agricultural production. Farmers have various informal and formal means of transferring and mitigating these risks. Informal means include savings, diversification, off-farm activities, etc. The most common formal means of risk mitigation is insurance. Insurance is a contract that transfers the risk of financial loss from an individual or business to an insurance company.

An agro insurance program was started in September 2014. The program is subsidized by the state and eight insurance companies participate in the program. The insurance package covers losses caused by hail, flooding, and storms, as well as by autumn frost (covered only for citrus). Since the beginning of the program, 49.3 thousand farmers (unique beneficiaries) have purchased insurance.

More than three years ago the ISET Economist blog discussed the idea of deposit insurance and how this idea may apply to Georgia. Today, the deposit insurance scheme is not merely an abstract idea, but a fast-approaching reality. Recently, the Ministry of Finance of Georgia discussed a draft law on implementing the deposit insurance system in the country.

There is a Georgian joke that goes: “Relatives are the people you see whenever their number changes”. In other words, relatives all tend to gather when any of them gets married, gives birth, or dies. As a result, we frequently observe Georgians organizing mass gatherings to either celebrate or mourn numerical “changes” in their families. While there is a recent trend among the wealthier and better-educated people to switch to more intimate, smaller events, the poorer rural people continue to arrange Georgian supra of monumental proportions.

The Government of Georgia (GoG) intends to create a national agricultural insurance program to achieve the following objectives: (i) developing the agricultural insurance market in Georgia; (ii) supporting agricultural production and increasing the competitiveness of farmers; and (iii) supporting the income of people involved in agricultural activities and minimizing their risks.