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ON THE URGENT ISSUES OF INSURING RISKS IN AGRICULTURE
Mirzayev Furkat Raxmatovich
Tashkent Institute of Economics and Pedagogy
fmirzayev4@gmail.com, +998935804722
Abstract:
The article explores the necessity of a new approach to the methodology of insuring
risks based on state support in the context of institutional changes in agriculture, as well as its
main directions. The advantages and unique characteristics of the insurance system in managing
risks in agriculture have been scientifically substantiated. The possibilities of applying it in the
agriculture of the Republic of Uzbekistan have been investigated, and recommendations have
been developed.
Keywords:
agriculture, farmer households, risks, damage, insurance, agro-insurance, insurance
products, risk management, credit, exchange, hedging, contracts.
On the Urgent Issues of Insuring Risks in Agriculture
Abstract:
The article examines the necessity and main directions of a new approach to the
methodology of risk insurance based on state assistance in the context of institutional
transformations in agriculture. The advantages and features of the insurance system in managing
agricultural risks are demonstrated. The possibilities have been studied and recommendations
have been developed for their use in the agriculture of the Republic of Uzbekistan.
Keywords:
agriculture, farming, risks, losses, insurance, agricultural insurance, insurance
products, risk management, credit, exchange, hedging, contract.
ON THE ISSUE OF CURRENT TASKS OF RISK INSURANCE IN AGRICULTURE
Abstract:
In the context of institutional changes in agriculture, the need for a new approach to
the methodology of risk insurance based on state support is researched. Advantages and specific
features of the insurance system in agricultural risk management are scientifically justified.
Possibilities of its application in agriculture of the Republic of Uzbekistan were studied and
recommendations were developed.
Key words:
agriculture, farm, risks, loss, insurance, agroinsurance, insurance products, risk
management, credit, exchange, hedging, contract.
Introduction
In the years of independence, significant work has been carried out in the agricultural system
alongside other sectors of the economy, including the transformation of property forms, the
formation of land ownership among farmers, and the establishment of a market infrastructure
serving the system. These measures are aimed at improving the living standards of the rural
population, addressing the issue of unemployment, and ensuring the supply of quality
agricultural products to both domestic and foreign markets.
In the current context, institutional changes in the agricultural sector and ensuring its alignment
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with modernity are being systematically implemented through measures aimed at securing a
worthy position for the products produced by primary agricultural producers in the global market
and ensuring food security. In this regard, the Action Strategy for the Development of the
Republic of Uzbekistan for 2017-2021 outlines tasks such as reducing the areas planted with
cotton and cereal crops, planting potatoes, vegetables, fodder, and oilseed crops on the vacated
lands, creating new intensive orchards and vineyards, developing and providing favorable
conditions for multi-sectoral farms, establishing agro-industrial enterprises specialized in the
deep processing of agricultural products, ensuring the storage, transportation, and sale of
agricultural products, and further expanding modern market services based on advanced
technologies in agrochemicals, finance, and other fields.
The elaboration of the concept of integrated socio-economic development of the Republic of
Uzbekistan until 2030 is based on the strategy of action on five priority directions of
development of the Republic of Uzbekistan for 2017-2021 implemented in the country, the
decisions of the Government taken in connection with reforming all aspects of financial and
economic relations, increasing the economic potential of industries and regions and addressing
social issues. The need to develop the concept is related to the solution of existing socio-
economic problems, risks and threats that limit the sustainable development of the economy in
the long term, as well as the establishment of goals and priorities for the transition from the
current state of the economy and social sphere to sustainable development and improvement of
living standards of the population[3].
The implementation of institutional reforms that provide a favorable environment for the
inclusion of the country's economy in the sustainable development trajectory is an important
condition for achieving food security of the country on the basis of market mechanisms in
agriculture, liberalization of resource allocation and pricing in agriculture, creation of an
effective system of economic relations aimed at introducing effective land use mechanisms.
The high degree of dependence on natural and climatic conditions creates the need to widely use
the capabilities of insurance and insurance systems in managing risks in agricultural production.
Insurance allows effective management of risks associated with the use of new technologies in
the network, risks in the use of credit resources, risks arising from the sale of agricultural
products through the exchange system (spot, forward, futures). The development of quality
insurance services and state programs in this direction allows to ensure financial stability of
agricultural producers, reduce state budget expenditures aimed at supporting the agricultural
network.
The fact that theoretical, methodological and practical aspects of risk insurance issues on the
basis of state support in the context of institutional changes in agriculture in Uzbekistan are not
sufficiently studied as a special, independent object of research, determines the relevance and
scientific and practical significance of the topic of this scientific article.
Literature of review
Theoretical foundations of institutional research g. Becker, V. Bichenkov, T.B. Veblen, W.
Hamilton, S.V. Grebennikov, V.V. Zotov, O.V. Inshakov, G.B. Kleiner, D. Commons, O. Kount,
N.N. Lebedeva, G.P. Litvintseva, A. Nekipelov, R.M. Nureev, A.N. Oleinik, Y. Olsen, V.F.
Presnyakov, V.O. Rosenthal, K. Savini, G. Spencer, W.L. Tambovtsev, O. Williamson, T.F.
Faizullin, A.I. Faizullin, D.P. Frolov and other classics of economic science.
Methodological research in institutionalism A.V. Andreev, M.D. Georgiev, M.M. Georgiev, D.K.
Gelbreit, S.V. Degtyareva, O.M. Dyusuche, S.K. Eshugova, S.V. Istomin, D.M. Clark, R. Coase,
K. Menger, F. Knight, D.R. Posner, E. Raskov, G. Simon, A.M. Sergeev, O.S. Sukharev, O.V.
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Fedonin, F. Hayek, A.E. Shastitko, T. It is covered in the scientific works of such economists as
Eggertsson.
The study of various aspects of agricultural development using the institutional approach R.H.
Adukov, P.I. Dugin, V.N. Galin, V.I. Gaiduk, G.M. Grisenko, A.P. Zadkov, V.I. Inshakov, M.E.
Kadomtseva, L.S. Kazines, P.D. Kosinskii, V.V. Kossov, B.S. Koshelev, A.V. Krivosheev, I.V.
Kursev, O.V. Mayevsky, A.F. Maksimov, I.V. Palatkin, P.M. Pershukevich, E.V. Popov, L.R.
Popova, E.V. Salalikina, V.F. Stukach, L.V. Tue, I.G. Ushachev, N.G. Filimonova, D.P. Frolov,
V.A. Shabashev, S.V. Sharibar, Y.I. Schmidt, I.V. Shchetinina and their like have been studied
by other agricultural economists.
Methodological problems of formation and development of insurance in the agrarian sphere E.V.
Abdrakhimov, M.I. Basakov, B.S. Belix, O.I. Biryuchev, D. Bland, K. Burrow, K.S. Wobie, A.A.
Gvozdenko, V.N. Dadkov, A.P. Zadkov, A.A. Zernov, A.N. Zubes, M.A. Klimova, S.M. Lapaev,
Direct Y.I., Tsikitenkov L.K., Nikitin A.B., Onishchenko A.M., Orlanyuk-Maliska L.A., Orlova
I.V., Pleshkov A.P., Semyonov V.N., Fedorenko A.B., Eldiev M.N. This has been reflected in
the concepts, theories and practical studies of scientists on these issues.
Uzbek scientists and specialists have also published a number of scientific works in this direction.
Among them were T. Malikov, O. Olimjonov, H. Sobirov, M. Askarova, G. Akhunova, H. Boev,
T. Baimurotov, O. Jo rayev, T. Iminov, M. Mirsodikov, Y. Tursunov, M. Khodjaeva, A.
Shermukhamedov, Sh. Imamov, H.Shennaev, H.Boev, P.Kaziev, B.Khodiev, B.Khamidov,
T.Baimuratov, M.Mirsodikov, B.Ashrafkhanov, R.Khusanov, A.It is possible to include such
scientists and specialists as Yadgarov. In recognition of scientific works and the work of the
above-mentioned scientists and specialists, we note that, despite the fact that the agricultural
sector and, consequently, agro-insurance occupy an important place in the economy of our
country, there are still few independent research works in this direction.
Theoretical and methodological issues of economic risk assessment were covered in the research
works of J.M. Keynes, F. Knight, J. Neumann, O. Morgenstern, J. Schumpeter and other
prominent economists. J.M.Keynes in his book “The General Theory of Employment, Interest
and Money” did not specifically study the problem of risk, but reflected in economic decision-
making, credit risk, the risk of inflation in conditions of uncertainty. F.Knight studied the
relationship between risk, uncertainty and profit of the enterprise in the context of perfect and
imperfect competition in his book “Risk, Uncertainty and Profit”. J. Neumann and O.
Morgenstern in their research approached the concepts of uncertainty and risk from the point of
view of game theory. The famous Austrian scientist-economist J. Schumpeter in his book
“Theory of Economic Development” investigated the factors causing permanent changes in the
economic system, paying special attention to the classification and grouping of risks based on
the study of economic dynamics.
Research on risk management in CIS countries became incredibly active at the end of the last
century. Including I.T.Balabanov in his research outlined the content of risk management and its
organization, methods, directions and strategies to reduce the level of risks, their insurance [9],
K.V.Baldin methodological, organizational and technological foundations of management
decision-making in the context of risks [10], S.M.Vasin and V.S.Shutov investigated risks in
entrepreneurial activity and their classification, methods of identification and analysis of risks,
features of risk management in the strategy of the enterprise [12]. M. from the scientists of our
country.Sharifkhodjaev and yo.Abdullaev manage risks (risk), risk and types of risks and their
management [7], Sh.Zainutdinov, A.Risks that Shermuhammedovs face in the management
process and their analysis, types of risks and forms of management [8], A. Abdullaev considered
one of the advanced forms of production organization in the scientific and theoretical
foundations of farms in the agrarian sphere [5], A.Abduganiev conducted scientific research on
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agriculture and its role in the economy, its importance, increasing its efficiency [6].
Analysis and results:
The need to improve insurance risk management practices in the context of institutional changes
in agriculture is reflected in the following:
- the fact that agricultural production, as a type of economic activity, is associated with a high
level of risks;
- in most cases it is the inability of agricultural enterprises to compensate for natural disasters or
production losses on their own;
- the fact that insurance coverage serves as a guarantee of compensation for losses associated
with adverse events, and also ensures the pace of sustainable development of the agricultural
network.
In practice, many strategies have been developed to manage agricultural risks, but agroforestry
remains an effective means of protection against various risks and foreseeable losses in
agriculture.
In addition to being a proven mechanism for managing all types of agricultural risks,
agroforestry is also the best way to consolidate the interests of all insurance market participants.
Therefore, the development of modern models of agrarian insurance implies an innovative
approach to it.
Subsequently, special attention is paid to the use of land plots by farms: "When approving land
plots of farms and other agricultural enterprises, their activities over the past three years are fully
analyzed. Agricultural enterprises are acceptable if the size of land plots is smaller than the
above. In this case, priority is given to land plots returned to the reserve of district
administrations, first of all to multi-sectoral farms with direct investments, good financial
condition and agricultural machinery, cotton-textile clusters, export and processing enterprises"
[4].
The expansion of economic reforms in agriculture can be assessed as positive, as favorable
conditions are created for the effective functioning of farms and farmsharecroppers. Taking into
account the long-term lease of land to producers on a tender basis and various factors related to
this, in particular the fact that farmers have relevant information and machinery, the productive
use of land ultimately serves to increase the level of productivity.
Alternatively, it should also be remembered that successful functioning of farmers and
horticulturalists is not only determined by the above-mentioned factors. Practical experience also
shows that the development of the agricultural sector at one time cannot be achieved with
sufficient adherence to the rules of agricultural technique. The fact is that the increase in
production in the network, and consequently the increase in the level of productivity, is greatly
influenced by favorable weather conditions, normalization of rainfall and similar natural
conditions.
It is important to note that insurance plays an important role in covering losses incurred by
agricultural producers, primarily farmers and gardeners, as a result of natural disasters and other
unpredictable natural phenomena. After all, insurance is a reliable tool that protects the property
interests of all economic entities and the population.
Despite the current high level of development of science and technology, many countries of the
world are often faced with problems associated with increasing risks of natural-climatic and
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economic content, which seriously affect crops in the agricultural sector, and such problems are
becoming increasingly global in nature.
Meanwhile, the analysis of international experience in this matter shows that insurance is the
most effective way of risk management in ensuring the continuity and financial stability of
agricultural production.
The high degree of dependence on natural and climatic conditions creates the need to widely use
the capabilities of insurance and insurance systems in risk management in agricultural
production. Insurance allows effective management of risks associated with the use of new
technologies in the network, risks in the use of credit resources, risks arising from the sale of
agricultural products through the exchange system (spot, forward, futures). Development of
quality insurance services and state programs in this direction allows to ensure financial stability
of agricultural producers, reduce state budget expenditures aimed at supporting the agricultural
network.
In order to organize insurance coverage of losses caused by natural disasters and other risks of
agricultural enterprises, including farmers and gardeners, and to better meet the need for
insurance services of agricultural producers, the market of agro-industrial services has been
functioning in our country for more than twenty years. However, despite the fact that positive
work on insurance of property interests of farmers and horticulturalists is being carried out, it
cannot be denied that in this direction there are accumulated problems waiting to be solved. In
particular, the introduction of market mechanisms in the system of agro-insurance, the fact that
the level of their full coverage of insurance protection is not in a satisfactory state, the index of
damage in crop insurance is maintained at a high level, in the insurance of agricultural crops,
property insurance is dominated by the principle of traditionalism belongs to producers and
livestock, insurance of risks. To positively solve problems in this area, it is necessary to carry out
the following quick measures: expand and improve the types of insurance services that cover
various risks in the activities of farms; attract insurance companies of different forms of
ownership to the agro-foreign market in agricultural insurance, create a healthy competitive
environment between them; encourage the offer of insurance services for; development of new
mechanisms for risk insurance in the production activities of multidisciplinary farms;
improvement of the mechanism of risk management at all levels of network management,
without being limited to Agrostructure in the management of agricultural risks; ensuring the
participation of the "Plant Protection Center" in the examination and detection of losses of
insurance phenomena in the agricultural sector, improving the system of indicators that allow an
objective assessment of agricultural risks and using them in their management through the
development of the basic areas of the agricultural sector; further expansion of public-private
partnership relations in the field of agricultural insurance,; to simplify and ensure transparency in
the practice of considering an insurance claim in the absence of an insurance event; to introduce
the practice of returning some of the insurance premiums to the insurer in cases where the
insurance event did not give ruy.
Today, the field of agricultural insurance is developing and improving in our republic. Currently,
the State Joint-Stock insurance company "Ozagrosugurta", which offers agricultural crop crop
crop crop insurance services, operates on this network. Operating under the Insurance Activities
Act, it operates about 40 types of insurance services in the direction of agricultural insurance.
A total of more than 3,337.5,000 insurance contracts were concluded by JSC" ozagrosugurta "
during its 2017 Operation. Of this, 53.7 thousand or 1.61 percent are agricultural insurance
contracts. The community received Rs 37.3 crore in agricultural insurance. at the expense of
insurance premiums in the amount of 1.9 trillion. held insurance liability in the amount of the
sum. 73.8 billion to customers on agricultural insurance under the received obligations. payment
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of insurance compensation in the amount of Rs. In the insurance premium insurance portfolio,
Agricultural Risk Insurance was 27.8 percent (Table 1).
1-жадвал
Agricultural insurance of “O’zagroinsurance” JSC for 2021-2023
Кўрсаткичлар
Ўлчов
2023 йилда Қишлоқ хўжалиги суғуртаси
бирлиги
жами
2021 йил 2022 йил
2023 йил
Суғурта мукофотлари
млн. сўм
234081,5
43862,7
67609
71314,0
Суғурта товонлари
млн. сўм
163337,3
8765,0
23441
89864,4
Суғурта жавобгарлиги млрд. сўм 67458,8
2150,4
2347390
2532,3
Шартномалар сони
минг дона 4737,5
42,96
63
68,7
The theoretical and methodological basis for the research of the methodology of risk insurance
on the basis of state support in the conditions of institutional changes in agriculture in our
country is the concepts of institutional changes in Agriculture, Risk Management in Agriculture,
Improvement of the risk insurance system on the basis of state support. This entails a deeper
study of the methodology of risk insurance on the basis of state support in the context of
institutional changes in agriculture and further improvement of its methodological aspects.
Although this area has been widely studied in the research of scientists of our country, research
on the management of risks in the activities of farms in the conditions of liberalization of the
economy and acceleration of structural reforms assumes a new approach. The need to develop
insurance practices in the agricultural sector is reflected in the following:
-the fact that agricultural production, as a kind of economic activity, is associated with a high
level of risks;
-in most cases, the inability of agricultural enterprises to independently compensate for natural
disasters or losses from production;
- the fact that insurance protection serves as a guarantee of compensation for losses associated
with adverse events, as well as ensuring the pace of sustainable development of the agrarian
network.
In practice, a variety of strategies have been developed aimed at managing risks in agriculture,
but agroforestry remains an effective means of protecting against various risks, foreseeable
losses in agriculture.
In addition to the fact that agrosugurta is a tested mechanism for managing all types of
agricultural risks, it is also the most optimal way to consolidate the interests of all participants in
the insurance market. Therefore, the development of modern models of insurance of the agrarian
sphere assumes an innovative approach to it.
The goal of a new approach to the methodology of risk insurance based on state support in the
context of institutional changes in agriculture is to improve the methodological and scientific
foundations of risk insurance based on state support in the context of institutional changes in
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agriculture and to develop mechanisms and measures to effectively use the possibilities of risk
insurance in agriculture.
To achieve the set goal, the following tasks must be carried out:
- institutional approach to state regulation of the economy and research on the theory of
institutional changes in agriculture;
- justification of the institutional role of farmers and peasants in agriculture and the need for their
insurance;
- research the theoretical foundations of Agricultural Risk Insurance on the basis of state support;
- highlighting the features of the basic principles, forms and organizational models of risk
insurance and the laws of development on the basis of state support in agriculture;
- research on the experience of foreign countries of Agricultural Risk Insurance;
fundamentals of institutionalism methodology and analysis of the technology for the
implementation of institutional change in agriculture;
- assessment and scientific research of institutional changes in agriculture;
- implementation of the fundamentals of the activities of institutions in agriculture, the financial
framework of institutional agreements and the analysis of the effectiveness of the institutional
environment;
- to highlight the institutional role and importance of farmers and farmers in the implementation
of reforms in agriculture;
- to highlight the methodological features of the allocation of budget subsidies to commodity
producers in Agricultural Risk Insurance;
- research on the methodology for assessing the size and effectiveness of state support for
insurance of agricultural products;
- analysis of development trends of other types of Agricultural Risk Insurance;
- research on the international aspects of insurance for agricultural risks with state assistance;
- Analysis of the practice of insurance of farms and farms at the present stage of agro-agricultural
development in Uzbekistan;
- to make recommendations on improving the organizational and economic foundations of
institutional changes in agriculture;
- development of proposals for improving the scientific and methodological foundations of risk
insurance in agriculture on the basis of state support;
- to make recommendations on the directions of improvement of the organizational basis of
insurance of farms and farms;
- Development of a strategy for the development of agricultural insurance in the Republic of
Uzbekistan and justification of the concept of improvement of agroforestry.
Conclusion
Risk management is an important task in the sustainable development of the agricultural sector.
A new approach to the methodology of risk insurance on the basis of state support in the context
of institutional changes in agriculture allows:
- on the basis of a systematic approach, a new interpretation of the concepts of" institutional
changes in agriculture "and" methodology for risk insurance in agriculture on the basis of state
support " is given and an improved terminological apparatus is developed;
- In the context of institutional changes in the Agriculture of the Republic of Uzbekistan, on the
basis of state support, the factors determining the need for a new approach to the methodology of
risk insurance are scientifically analyzed and measures for their effective management are
substantiated;
-on the basis of state support in agriculture, a methodology for assessing the risk insurance
process in agriculture, taking into account its factor and consequential aspects, is developed in
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order to determine the effective use of opportunities determined by the features of the basic
principles, forms and organizational models of risk insurance and development laws;
- methodological recommendations for insurance of risks in agriculture are given by assessing in
some cases with coefficients that take into account the fundamentals of the activities of
institutions in agriculture, the financial foundations of institutional agreements and the
effectiveness of the institutional environment in complex, and systematic research of factors;
-in the context of institutional changes in agriculture, on the basis of state support, a
methodology for assessing the prospects for development and its impact on economic growth is
developed, which allows you to determine the priority factors for the effective organization of
risk insurance;
-on the basis of a new conceptual scheme of research on the interaction of various factors, a
strategy for the development of agricultural insurance in the Republic of Uzbekistan will be
developed, and the concept of improving agroforestry will be scientifically substantiated.
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