Extreme weather could cost European agriculture up to €90 billion annually

Wednesday 12 August 2026 - 13:00

By: Azzat Manal

Extreme weather could cost European agriculture up to €90 billion annually

The European Union’s agricultural sector could face significantly higher financial losses from extreme weather events in the coming decades, with annual damages potentially exceeding €40 billion by 2050 and reaching as much as €90 billion in particularly severe years, according to a study prepared by insurance broker Howden for the European Investment Bank.

The analysis indicates that European farmers are already losing around €28 billion annually because of adverse weather conditions, including droughts, heavy rainfall, hail and frost. Drought alone accounts for more than half of the current losses.

Climate change is expected to intensify these pressures, with the study projecting an increase of roughly 40% in annual agricultural losses by 2050. The growing frequency and severity of extreme weather events could therefore create an increasingly difficult operating environment for farmers across the EU.

The study also highlights a major gap in agricultural insurance coverage. A substantial share of climate-related losses remains uninsured, leaving farmers and agricultural businesses exposed to increasingly unpredictable weather conditions and placing additional pressure on public support mechanisms.

Climate risks are not the only challenge facing European agriculture. Farmers have also raised concerns about environmental regulations, rising production costs and stronger competition from imported agricultural products.

Imports from Ukraine have been particularly controversial in several European countries. Following the introduction of preferential trade measures designed to support the Ukrainian economy, farmers in some EU member states argued that increased imports could put downward pressure on local prices. In response, the European Union has introduced additional safeguards for sensitive agricultural products.

The EU’s trade relationship with the Mercosur bloc has also generated debate among agricultural organizations, particularly over concerns about competition from foreign producers. European policymakers have included safeguard mechanisms intended to respond to sudden increases in imports or serious damage to domestic producers.

At the same time, higher fertilizer costs are adding to farmers’ expenses. Changes in EU trade policy toward Russian and Belarusian fertilizer imports, combined with elevated energy costs, have contributed to uncertainty over agricultural input prices. Broader disruptions in global energy markets can further increase production and transportation costs.

Heatwaves are already changing the way agricultural work is organized in parts of Europe. Farmers in countries such as Spain and Italy, as well as in the United Kingdom, have increasingly adjusted working hours to avoid the hottest periods of the day. Extreme temperatures can also affect crop quality, yields and livestock conditions.

The combination of climate change, energy costs, fertilizer prices and international trade pressures is therefore creating a complex challenge for European agriculture. While insurance can help reduce the financial impact of extreme weather, the scale of projected losses suggests that adaptation, investment in resilient farming systems and improved risk-management mechanisms will become increasingly important.