Azerbaijan, Baku, July 13 / Trend U. Ismayilova /
Azerbaijani Microfinance Association (AMA) developed the project "Insurance mechanism for agricultural loans" with the support of the humanitarian organization OXFAM. It intends to submit the document to the Ministry of Finance for approval and implementation in future, AMA executive director Jala Hajiyeva said on Tuesday during the presentation of a report on the results of the project.
"The main purpose of developing such a mechanism was the access to finance small farmers, as well as support the development of Azerbaijani agriculture ", Hajiyev said.
She said that the period of legal harmonization of the report, according to which the document will be submitted to all relevant government structures, begins today.
Hajiyeva said that the only international organization supporting realization of the project now is OXFAM. A major conference on microfinance will be held in Baku in October. The project will also be represented to seek new international partners.
Head of the research group of the project "Agricultural loans insurance" Vagif Hasanov said on the presentation of the report that state support is required to introduce a new mechanism for the high level of risk in this area. Rustamov proposes the creation of a separate state agency or a guarantee fund to regulate these processes.
He said that the world experience of using the mechanism of agricultural insurance was studied within the research. For example, a state organization is operating in Nigeria, Slovenia and Belgium. There is a state organization cooperating with private sector in Turkey, France, Czech Republic. A state organization cooperating with private sector operates in Lithuania and Estonia, a state organization cooperating with international funds in Romania and Spain, a state organization cooperating with the private sector and international funds.
The results showed that Azerbaijani insurers are not interested in insurance of agriculture, and local banks - in granting small farmers because of the high level of risk in this area.
"The limited possibilities with actual funding is a major problem of Azerbaijani farmers, particularly small," Rustamov said.
It is necessary to introduce new tools, including a single insurance risk, insurance of joint risk, crop insurance, insurance rates, insurance proceeds from the sale of crops, general farm insurance to develop a more effective mechanism for the insurance of agricultural loans, Rustamov said.
The expert said that it is necessary to take into account the risk - natural (weather), health (diseases and epidemics), market (price difference at the local and international markets, changes in quality standards) and political, social, economic (the war, financial crisis, the weakening of institutional arrangements) to introduce a new mechanism.