1. William Edwards Iowa State University Crop Insurance in Argentina: La Dulce Cooperative

2. 85 years of serving the farmers of Buenos Aires Province in Argentina

3. 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

4. Argentina (2004)USA (2004) Policies sold100,3251,228,796 Premiums paid$107 million $4,186 million Acres insured26 million221 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 ratio50 %77 % Policies, Premiums and Indemnities

5. 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

6. Types of Perils Covered

7. Hail and Wind Damage

8. Crops Insured by La Dulce Soybeans Soybeans Corn Corn Sunflowers Sunflowers Wheat Wheat Barley Barley Oats Oats Rye Rye Flax Flax Canary grass Canary grass Peas Peas

9. Setting the Guarantee Producer chooses the number of quintals per hectare to insure Producer chooses the number of quintals per hectare to insure Minimum and maximum by crop, zone Minimum and maximum by crop, zone No production history needed No production history needed Can choose deductible, 0% up to 40% Can choose deductible, 0% up to 40%

10. Setting the Premium Premiums are fixed as a percent of the value of the coverage, by each company Premiums are fixed as a percent of the value of the coverage, by each company Discounts for higher deductibles Discounts for higher deductibles DeductibleDiscount. Small GrainsCourse Grains 10%20%22% 20%34%38% 30%45%50% 40%52%59% Price is the average price at the port during the last 10 days before: Price is the average price at the port 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

11. Setting the Premium Discount of.25% for each year affiliated with the cooperative Discount of.25% for each year affiliated with the cooperative Discounts for repeat customers Discounts for repeat customers Excess premiums are rebated to members at the end of the year or invested in the foundation Excess premiums are rebated to members at the end of the year or invested in the foundation

12. Calculating the Indemnity Percent damage is determined by the adjustor. Looking at using satellite photography. Percent damage is determined by the adjustor. Looking at using satellite photography. Indemnity = production guarantee Indemnity = production guarantee x area insured x price at harvest x % damage (> deductible) Deductible disappears as % damage increases. Zero at 95% damage or higher. Deductible disappears as % damage increases. Zero at 95% damage or higher. Swiss and German reinsurance companies Swiss and German reinsurance companies

13. Example: 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% deductible 20% deductible Premium is 2.42% of coverage value Premium is 2.42% of coverage value Premium =.0242 x 35 qtl. x 77 = 65 p Premium =.0242 x 35 qtl. x 77 = 65 p ($8.70 per acre)

14. Example: Soybeans Assume hailstorm causes 50% damage Assume 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/ha x 2,695 P/ha = 1,011 P/ha ($134.75/a) ($134.75/a)

15. Comparison of Premiums ($ per acre) Corn La Dulce SW Iowa APH 80%$8.48$15.28 70%$6.86$7.25 60%$5.64$3.79 Soybeans 80%$7.62$9.12 70%$6.14$3.80 60%$5.04$1.75 Wheat 80%$5.24$11.00 70%$4.38$6.65 60%$3.81$4.20

16. 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 %

17. 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

18. Year % 1999 36,8 2002 44,9 2003 58,0 2004 52,0 Percent of Farmers Who Purchased Crop Insurance the Previous Year Acres Farmed % who purchased insurance TOTAL 52 Less than 500 43 From 500 to 1,500 54 More than 1,500 62

19. Hectares insured by La Dulce Cooperative since 1970 Record Hectares Insured: 512.776 Has

20. Soybeans: 162.624 Has Sunflowers: Sunflowers: 59.714 Has Corn: 28.180 Has Hectares of Grains Insured

21. Number of New Members

22. Guillermo Thomas, General Manager

23. Use of GPS Mapping

24. Silvana Roccabruna, Chief Adjustor

25. Other Activities of LA DULCE COOPERATIVE Convention Center for Cultural Events and Continuing Education

26. Other Activities of LA DULCE COOPERATIVE Annual Meeting and Prizes Cruises Vacations Pickup Appliances and Computers

27. Other Activities of LA DULCE COOPERATIVE Cultural Foundation Student competition for technological innovation Town Library and Bookmobile to Smaller Communities

28. Foreign Experts??