Study on risk management in EU agriculture : case study 6 : critical issues for the implementation of an Article 39 mutual fund (IST)

Three Member States, Hungary, Italy, and Spain (the Castilla y Leon region) planned expenditures in their Rural Development programmes for creating an Income Stabilisation Tool (IST) under Article 39 for the period 2014-2020. At the beginning of 2017, none of these Member States had implemented such an IST fund, even though Hungary and Italy are still considering their implementation. Many studies have been performed on farm income insurance within Member States and a few on the feasibility of an IST under Article 39. It is known that other studies are currently performed in other Member States but no results have been yet published. Several reasons may explain why Member States did not use such an instrument. They differ from one Member State to another with a wide range of expressed opinions. The case study focuses on technical reasons as expressed by stakeholders in the Member States wishing to develop an IST and as deducted from feasibility studies. The main constraints are related to the three following questions of: 1. How to design an IST? 2. How to estimate the budget and finance an IST with a fixed budget when potential indemnities are random? 3. How to organise, initiate, and govern a mutual fund (identical to difficulties of an Article 38 mutual fund)?