Green Insurance: Lower Pesticide Use for Farmers

The economic risk linked to production losses is a barrier to the adoption of agricultural innovations by farmers. For example, although decision support tools (DTOs) exist, their uncertain effectiveness may represent an additional risk. The University of Bordeaux and INRAE, in collaboration with the French Institute of Vine and Wine (IFV), the wine cooperatives of Tutiac (Gironde) and Buzet (Lot-et-Garonne) as well as the insurer Groupama have tested a specific insurance system, called green insurance, for four yearsto cover possible losses linked to the use of an OAD developed by the IFV to reduce the use of fungicides in viticulture.

The results, published in the international magazine European Review of Agricultural Economics, show that the security provided by insurance allows winegrowers to test the OAD over a sufficiently long period to assess its quality. The winegrowers have reduces the use of fungicides by 30 to 50%the tool was able to be improved thanks to their feedback, and the insurer enriched its knowledge of the associated risks. A specific insurance system could facilitate experimentation and adoption of pesticide-saving innovations and practices.

Three fungal diseases in the crosshairs

Unlike crop losses linked to climatic hazards, which can be covered by multi-risk climatic insurance subsidized under the common agricultural policy (CAP), losses linked to diseases or pests are not insured. While reducing the use of pesticides is a major issue in agriculture and a strong expectation of society, the experimentation of new practices or new innovative tools by farmers exposes them to a significant risk of loss of production and economic loss.

In viticulture, almost 85% of pesticide treatments are used to combat three fungal diseases: downy mildew, powdery mildew and black rot. Based on existing commercial tools, the IFV has developed a high-precision decision support tool (DTO) which tells the winegrower when to treat and at what dose to avoid unnecessary interventions. But removing a treatment or reducing a dose can lead to sometimes dramatic crop losses. In order to evaluate this OAD directly in the field, scientists from Bordeaux Economic Sciences laboratory (BxSE, CNRS unit, INRAE and University of Bordeaux) and the IFV therefore collaborated with the agricultural cooperatives of Tutiac and Buzet and the insurance company Groupama. Together, they experimented for four years with a system combining the use of OAD – tested and improved over time – and specific insurance covering losses in the event of failure.

Green insurance to encourage farmers to experiment with new practices

Economists first developed a model that analyzes how a farmer makes decisions faced with an innovative tool whose reliability is uncertain. This model shows that theadoption of an innovation depends not only on its efficiency but also the “path” by which the farmer learns to trust him : an early failure may be enough to rule it out permanently. To overcome this obstacle, the researchers co-constructed, with the insurance company and the two wine cooperatives, a unique insurance contract, called “green insurance”conditioned for use by the OAD and largely subsidized by the Nouvelle-Aquitaine Region as part of the VitiREV program*. Winegrowers were compensated for possible production losses linked to illnesses by insurance provided that they had followed all the recommendations of the OAD, with a deductible of 5%.

A 30 to 50% reduction in the use of fungicides

The use of the tool made it possible to reduce the use of fungicides on experimental plots by 30% to 50% (approximately 75 ha per year), carried out in organic and conventional agriculture. The first three years, production losses linked to diseases remained below 5%. These positive results encouraged the cooperatives to expand the surface area tested, and the insurer to reduce contributions. However, one of the plots suffered significant production losses over the last year, which gave rise to the payment of compensation by the insurer.

The green insurance mechanism encouraged winegrowers to test the OAD over a sufficiently long period for their allow the quality and usefulness of the tool to be assessed. A virtuous circle has begun between learning and improving the quality of the tool thanks to feedback from its use in real conditions. The system has gradually become more efficient and less expensive to insure. As the tool cannot predict 100% the right dose at the right time, there remains a risk of loss. If insurance is not always enough to encourage experimentation after a bad year, it nonetheless remains an important facilitator. These results demonstrate that this type of insurance would be a major lever to encourage farmers to experiment with new innovations and practices to reduce the use of pesticides.

Source : Inrae

*Led by the Nouvelle-Aquitaine Region, this program has brought together more than a hundred stakeholders from the wine industry and the research community since 2020 and aims to reduce the use of pesticides in viticulture.