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Farmers could face €50m bill over OGA closure

Agriculture Minister Nicos Kouyialis inspecting local produce (File photo)

By George Psyllides

FARMERS could be asked to return some €50m they received in compensation between 2008 and 2014 if the European Union rules that Cyprus’ current insurance scheme violated competition rules.

Agriculture Minister Nicos Kouyialis said the government planned to ask the EU for permission to apply the current scheme in 2015 until a new one was prepared by experts.

The Agricultural Insurance Organisation (OGA) will close at the end of the year and its functions and staff will be transferred to the ministry.

Kouyialis sought to stress that the government was not scrapping agriculture insurance, it was scrapping OGA.

“A minister would be crazy to have this tool and shut it down,” he said.

The minister told MPs that the EU had warned Cyprus in 2012 that OGA was in violation of EU rules because insurance was compulsory and farmers did not get to pick the company they wanted. On top of that, OGA operated as an insurance company with state support, the minister said.

“We have reached 2014 when the current agriculture insurance scheme expired and we must go back to Brussels to ask for a year’s extension,” he said.

Between 2000 and 2014, OGA received €59m from farmers and an equal amount from the state. It also got €9m from interest, the minister said. OGA paid €100m in compensation and €37m in administration expenses. Its operating expenses were around €2.5m a year.

“This organisation has no future and it appears it is not viable,” Kouyialis said.

House Agriculture Committee chairman, AKEL MP Yiannakis Gavril, accused the government of shutting down an organisation that supported farmers.

“We have not heard how the new OGA will be created,” he said.

Gavril described the minister’s warning as scaremongering.

Reaction from farmers’ organisations was mixed, depending on which end of the political spectrum they belonged.

Leftist EKA said it would oppose its closure.

“Such a development would bring about voluntary insurance and I don’t know how many farmers will be insured under the current conditions,” Christos Kourtellaris said. “Private companies will result in higher insurance costs.”

Panagrotikos did not appear to have a problem with OGA closing, provided the farmers’ needs were secured without additional costs.

The decision to close OGA would remove a €2.5m burden from the farmers’ shoulders, Tasos Giapanis, Panagrotikos’ general secretary, said.

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