Drought takes historic toll: more than €430M in compensation payments

Spain countrysideRural areas

The lack of rainfall during the first half of this year, barely alleviated by the heavy rains at the end of May and the first part of June, is taking an unprecedented toll on the Spanish agricultural insurance system, known as Agroseguro (Agrupación Española de Entidades Aseguradoras de los Seguros Agrarios Combinados). According to figures released this Thursday and reported in the digital newspaper “La Información”, as of July 13, a record amount of €430.68 million had been paid out in compensation.

Agroseguro sources, consulted by this newspaper, believe that this figure will be closer to €500 million by the end of the year. This is because only compensation related to winter arable crops (winter cereals such as rye or oats, legumes and rape) that have already been assessed have been counted. Possible effects on crops such as vineyards, olive groves and sunflowers have yet to be estimated.

The above figure is historic and well above the amount paid by Agroseguro in the 2017 drought, which reached €220 million; and clearly pales in comparison to the compensation paid during the first half of last year for claims due to the lack of rainfall, which amounted to €90 million.
In a recent meeting with journalists from Agroseguro, it was put on the table that the overall amount (including other claims such as floods, frost, hail, etc.) to be paid by the agricultural insurance system will exceed €900 million this year. This is a new peak in compensation payments that have been rising for several years: €626.62 million in 2019; €616.19 million three years ago; €747.78 million in 2021; and €806.71 million in 2022.

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The Corner
The Corner has a team of on-the-ground reporters in capital cities ranging from New York to Beijing. Their stories are edited by the teams at the Spanish magazine Consejeros (for members of companies’ boards of directors) and at the stock market news site Consenso Del Mercado (market consensus). They have worked in economics and communication for over 25 years.