Farmers have become used to insuring their crops or livestock, but often lose income due to circumstances beyond their control, such as unfavourable prices on commodity exchanges or on sales markets. There are also other uninsurable events that destroy harvests. In such cases, an innovation in Lithuania could help farmers – payments from a mutual fund.

„So far, insurers do not cover damages caused by fluctuations in production costs or in farm-gate prices. Therefore, one of the tools to ensure compensation for lost income is mutual funds. In the event of a crisis, farmers would be able to draw on their own funds.

This is an important step towards a stronger agricultural sector that will enable farmers to recover from financial losses and feel more secure, as this financial support will be a valuable tool to deal with unpredictable market conditions and other challenges. Although the scheme is still new, its potential is great“," says Rimantė Juodenienė, Advisor to the Strategic Planning Unit of the Strategic Planning Department of the Ministry of Agriculture.

1.5 million opt-outs await 2025-2029

Risk is an integral part of the agricultural business, making risk management and the development of tools to manage it a key objective of agricultural policy. To achieve this, the Ministry of Agriculture proposes to organise agricultural risk management funds (RVFs).

This year  €169.1 thousand is available for the ongoing calls for proposals to create such funds. The intensity of support is up to 70% of the eligible project costs.

The call for applications under the intervention measure "Mutual Assistance Funds" of the Strategic Plan for Agricultural and Rural Development of Lithuania 2023-2027 will run until 31 March. The next call is scheduled for 1 October to 28 November 2025

How to get started?

RVF – a voluntary scheme of mutual assistance between agricultural operators based on contributions from members to maintain their income levels.

„To qualify for support, applicants must be accredited and apply for accreditation to the National Paying Agency under the Ministry of Agriculture. The most important condition for accreditation – these funds must be set up by at least five agricultural operators. They must have a separately managed account for mutual assistance and an administrator“," says advisor R. Juodenienė.

An administrator is needed to manage the account, to calculate losses, to administer contributions or compensation for loss of income, to keep accounts and for other activities related to the RPF.

One other condition – the rules of operation of the RTF must be adopted and made public. They must be published on the website of the authority responsible for the management and control of the expenditure of the European Agricultural Fund for Rural Development. The RTF operational rules shall lay down: the administration, accumulation and use of RTF funds; the calculation and payment of contributions and compensation for loss of income; the conditions for becoming a member of the RTF and for leaving the RTF; the provision of information on possible conflicts of interest; the conditions for the reduction or non-payment to members of the RTF of compensation for loss of income due to negligence; the liability of members of the RTF in respect of debts incurred as a consequence of the RTF's activities; and others.

In accordance with the requirements of the Rules for the implementation of the Strategic Plan's intervention measure "Mutual Assistance Funds", support shall be granted for the establishment and maintenance of up to two workplaces: office equipment and furniture, computer equipment, software, wages, stationery. If one workstation is set up, the amount to be reimbursed will be reduced proportionately.

The reimbursement is for three years – up to a maximum of EUR 20 000 in the first year of the activity, up to a maximum of EUR 18 000 in the second year of the activity and up to a maximum of EUR 16 000 in the third year of the activity for eligible costs.

Initial contribution to the RPF in the first year of the Fund's operation – up to a maximum of EUR 1 000. The rules provide for the compensation of losses to the member of the fund and the intensity of the support is determined in relation to the support received for the initial contribution.

The benefit is compensatory and the costs must be incurred and documentary evidence of the costs must be provided when applying for the benefit.