William EdwardsIowa State University
Crop Insurance in Argentina:La Dulce Cooperative
85 years of serving the farmers of Buenos Aires
Province in Argentina
Brief History of Agricultural Insurance in Argentina
Early: Spooking of horses pulling carriages
Early: Theft of livestock
1953: Significant increase in insuring crop losses
1992: Reinsurance coverage
1998: Multiple peril insurance
2000: Office of Agricultural Risk (ORA) created
2004: First national survey of agricultural insurance
Argentina (2004) USA (2004)
Policies sold 100,325 1,228,796
Premiums paid $107 million $4,186 million
Acres insured 26 million 221 million
Premium per acre $4.18 $18.94 (total)
Indemnities paid $53.6 million $3,207 million
Indemnity paid per acre $2.06 /acre $14.51
Payback ratio 50 % 77 %
Policies, Premiums and Indemnities
•22 covered hail damage.•18 covered additional causes of damage such
as wind, frost, excess rain.• 7 offered multiple peril coverage.• 3 offered livestock risk coverage (production)
•No revenue insurance
There are 27 ag insurance companies in Argentina.
Types of Coverage Offered
Hail and Wind48%
Hail Only49%
Multiple Peril3%
Types of Perils Covered
Hail and Wind DamageHail and Wind Damage
Crops Insured by La DulceCrops Insured by La Dulce SoybeansSoybeans Corn Corn SunflowersSunflowers WheatWheat BarleyBarley OatsOats RyeRye FlaxFlax Canary grassCanary grass PeasPeas
Setting the GuaranteeSetting the Guarantee
Producer chooses the number of Producer chooses the number of
quintals per hectare to insurequintals per hectare to insure Minimum and maximum by crop, zoneMinimum and maximum by crop, zone No production history neededNo production history needed Can choose deductible, 0% up to 40%Can choose deductible, 0% up to 40%
Setting the PremiumSetting the Premium Premiums are fixed as a percent of the Premiums are fixed as a percent of the
value of the coverage, by each companyvalue of the coverage, by each company Discounts for higher deductiblesDiscounts for higher deductibles
DeductibleDeductible Discount Discount ..
Small GrainsSmall Grains Course GrainsCourse Grains10%10% 20%20% 22%22%20%20% 34%34% 38%38%30%30% 45%45% 50%50%40%40% 52%52% 59%59%
Price is the average price at the port Price is the average price at the port during the last 10 days before:during the last 10 days before:• January 20 for small grainsJanuary 20 for small grains• May 10 for corn, soybeans, sunflowersMay 10 for corn, soybeans, sunflowers
Setting the PremiumSetting the Premium
Discount of .25% for each year Discount of .25% for each year affiliated with the cooperativeaffiliated with the cooperative
Discounts for repeat customersDiscounts for repeat customers Excess premiums are rebated to Excess premiums are rebated to
members at the end of the year or members at the end of the year or invested in the foundationinvested in the foundation
Calculating the IndemnityCalculating the Indemnity Percent damage is determined by the adjustor. Percent damage is determined by the adjustor.
Looking at using satellite photography.Looking at using satellite photography. Indemnity = production guaranteeIndemnity = production guarantee
x area insuredx area insured
x price at harvestx price at harvest
x % damage (> deductible)x % damage (> deductible) Deductible disappears as % damage increases. Deductible disappears as % damage increases.
Zero at 95% damage or higher.Zero at 95% damage or higher. Swiss and German reinsurance companiesSwiss and German reinsurance companies
Example: SoybeansExample: Soybeans
Coverage: 35 quintals/ha. (51 bu/a)Coverage: 35 quintals/ha. (51 bu/a) Price is 77 pesos/quintal ($7 / bu)Price is 77 pesos/quintal ($7 / bu) Coverage value is 2,695 P/ha ($359/a)Coverage value is 2,695 P/ha ($359/a) 20% deductible20% deductible Premium is 2.42% of coverage valuePremium is 2.42% of coverage value Premium =.0242 x 35 qtl. x 77 = 65 pPremium =.0242 x 35 qtl. x 77 = 65 p
($8.70 per acre)($8.70 per acre)
Example: SoybeansExample: Soybeans Assume hailstorm causes 50% damageAssume hailstorm causes 50% damage Deductible shrinks to 12.5%Deductible shrinks to 12.5% Payment = (50% -12.5%) = 37.5%Payment = (50% -12.5%) = 37.5%
x 2,695 P/ha = 1,011 P/hax 2,695 P/ha = 1,011 P/ha
($134.75/a)($134.75/a)
Comparison of Premiums ($ per acre)Comparison of Premiums ($ per acre)CornCorn La DulceLa Dulce SW Iowa APHSW Iowa APH
80%80% $8.48$8.48 $15.28$15.28
70%70% $6.86$6.86 $7.25$7.25
60%60% $5.64$5.64 $3.79$3.79
SoybeansSoybeans
80%80% $7.62$7.62 $9.12$9.12
70%70% $6.14$6.14 $3.80$3.80
60%60% $5.04$5.04 $1.75$1.75
WheatWheat
80%80% $5.24$5.24 $11.00$11.00
70%70% $4.38$4.38 $6.65$6.65
60%60% $3.81$3.81 $4.20$4.20
Market Share in Argentina (by value insured)
1. Sancor Coop. 22 %
2. Segunda Coop. 23 %
3. San Cristóbal Coop. 8 %
4. Federal Patronal 6 %
5. Mapfre Argentina 6 %
5. Zurich SA 6 %
12. La Dulce 2 %
Province Premiums Indemnities Hectares Capital Insured
Córdoba 33 % 37 % 28 % 25 %
Buenos Aires 32 % 30 % 39 % 38 %
Santa Fe 19 % 13 % 18 % 21 %
Entre Ríos 5 % 3 % 7 % 8 %
Jujuy 4 % 8 % 0 % 2 %
La Pampa 3 % 5 % 4 % 2 %
Resto 4 % 4 % 4 % 4 %
Crop Insurance Coverage by Province
Year %
1999 36,8
2002 44,9
2003 58,0
2004 52,0
Percent of Farmers Who Purchased Crop Insurance the Previous Year
58
44.9
36.8
52
0
10
20
30
40
50
60
70
Año 1999 Año 2002 Año 2003 Año 2004
Acres Farmed % who purchased insurance
TOTAL 52
Less than 500 43 From 500 to 1,500 54 More than 1,500 62
0
100.000
200.000
300.000
400.000
500.000
600.000
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36
Hectares insured by La Dulce Cooperative since 1970
Record Hectares Insured: 512.776 Has
0
20.000
40.000
60.000
80.000
100.000
120.000
140.000
160.000
180.000
1 2 3 4 5 6 7 8 9 1 11 1 1 1 15 1 17
Soybeans: 162.624 HasSoybeans: 162.624 Has
Sunflowers:Sunflowers:59.714 Has59.714 Has
Corn: 28.180 HasCorn: 28.180 Has
Hectares of Grains Insured
Socios Nuevos
43 38 40 46 19 2273
110
292 282 301352
92 119 108 106
300353
314
504
647
0
100
200
300
400
500
600
700
86/8
7
87/8
8
88/8
9
89/9
0
90/9
1
91/9
2
92/9
3
93/9
4
94/9
5
95/9
6
96/9
7
97/9
8
98/9
9
99/0
0
00/0
1
2001
- 2
002
2002
- 2
003
2003
- 2
004
2004
- 2
005
2005
- 2
006
2006
- 2
007
Number of New Members
Guillermo Thomas, General Manager
Use of GPS MappingUse of GPS Mapping
Silvana Roccabruna, Chief Adjustor
Other Activities of LA DULCE COOPERATIVE
Convention Center for Cultural Events and Continuing Education
Other Activities of LA DULCE COOPERATIVE
Annual Meeting and Prizes
Cruises
Vacations
Pickup
Appliances and Computers
Other Activities of LA DULCE COOPERATIVE
Cultural Foundation
Student competition for technological innovation
Town Library and Bookmobile to Smaller Communities
Foreign Foreign Experts??Experts??