Introduction to the International Agricultural Risk, Finance, and Insurance Conference

Introduction to the International Agricultural Risk, Finance, and Insurance Conference

Article Type: Introduction From: Agricultural Finance Review, Volume 74, Issue 2.

Agricultural insurance plays a vital role in the stability and growth of the agriculture sector, helping to ensure a more productive and stable food supply for countries around the world. In order to meet demand and feed the world into the future and enhance world food security, it is important to have a strong agricultural insurance system in place in a global context.

In managing agricultural risks, insurance can help to reduce the negative impacts of natural catastrophes (such as floods, or droughts) through effective risk transfer at both producer and government levels, expedite recovery, enable investment by reducing fluctuations in investment returns, improve access to credit, reduce government liability in financing post-disaster reconstruction which can often be more costly to government compared to well-functioning insurance programs, among other benefits.

In order to drive increased productivity and stability in the agriculture and food sector, it is critical that cooperation among experts becomes progressively more international in scope, and we expand the borders of traditional disciplines. This means tapping into interdisciplinary perspectives that span the areas of agricultural economics, plant sciences, finance, risk management and insurance, climatology, actuarial science, etc. It is also essential to bridge the gap across stakeholders such as government, private sector insurers and reinsurers, producer organizations, academics, and NGO's, in an effort to increase research innovation and product development.

As agricultural risks become more complex we need to step up the pace of innovation, with a focus on long-term sustainability. It is imperative that consortiums emerge in order to drive change in a timely and efficient manner to help achieve long-term profitability, competitiveness, and sustainable agricultural production. This is precisely the aim of the International Agricultural Risk, Finance, and Insurance Conference (IARFIC).

IARFIC is a unique venue that brings together leaders in agriculture, finance, and risk management, across disciplines, and across borders, tackling very important and current topics in an effort to maintain a strong agricultural sector and improve global food security. The theme of the conference is “Agricultural Risk, Finance, Insurance and Actuarial Science”. The inaugural IARFIC took place in June 2012 at the Central University of Finance and Economics, Beijing, China, and was a tremendous success. The Second Annual IARFIC was held June 14-16 in beautiful Vancouver, British Columbia, Canada. The conference was hosted by the Waterloo Research Institute in Insurance, Securities, and Quantitative Finance, University of Waterloo, Canada. Co-organizers included China Institute for Actuarial Science, China; Central University of Finance and Economics, China; and University of Manitoba, Canada.

The 2013 conference delivered a dynamic program with high-quality speakers focussing on innovative research, policy discussions, and business challenges and successes. The conference attracted more than 120 participants, including 40 research paper presentations, 30 invited panel discussants, and four keynote speakers. The opening ceremony heard remarks by Lysa Porth, Assistant Professor and Guy Carpenter Professor in Agricultural Risk Management and Insurance, Warren Centre for Actuarial Studies and Research, University of Manitoba, Canada, followed by a welcome address by Junsheng Li, Deputy President, Central University of Finance and Economics, Beijing, China. We also had the privilege of listening to a very interesting presentation regarding Comprehensively Promoting Agriculture Risk, and Enhancing Stable and Sound Development of Agriculture in China by a special guest, Mr Yang Qingcai, the Executive Director of China Agricultural Risk Association, and former Vice Governor of Jilin Province and Deputy Chairman of People's Congress of Jilin Province.

The opening ceremony continued with a dynamic keynote presentation on Agricultural Risk Management and Insurance: A Reinsurer's View by Michael Roth, Senior Underwriter, Q-Re, Zurich, Switzerland. Parliamentary Secretary to the Minister of Agriculture and Agri-Food Canada, Pierre Lemieux, concluded the ceremony with a talk on the Canadian Agricultural Insurance Outlook, and on behalf of Agriculture Minister Gerry Ritz, announced up to $15 million for the launch of a new Growing Forward 2 program, Agri-Risk Initiatives (ARI), to encourage the development and adoption of new private sector or producer-funded agricultural risk management tools. Several media outlets publicized the ARI announcement at IARFIC, including the Wall Street Journal.

Keynote, Dr Martin Odening, Professor, Department of Agricultural Economics Farm Management Group, Humboldt-Universitat zu, Berlin, Germany, began the first plenary session with a thought-provoking talk on the Challenges of Insuring Weather Risk in Agriculture. Dr Odening's presentation is published in this issue of Agricultural Finance Review. The panel discussion followed, with a theme on Climate Change and the Impact on Agricultural Risk Management and Insurance. The moderator of this discussion was Joshua Woodard, Assistant Professor, Charles H. Dyson School of Applied Economics and Management, Cornell University, New York, NY, USA, with five discussants, including Gary Falk (Director, Business Risk Management Branch, B.C. Ministry of Agriculture, BC, Canada), Karen Garret (Professor, Department of Plant Pathology, Kansas State University, USA), David Sparling (Professor, Operations Management, Chair of Agri-Food Innovation, Ivey Business School, Western University, Ontario, Canada), G. Cornelis van Kooten (Professor and Canada Research Chair, Department of Economics, University of Victoria, BC, Canada), and Ian Nichols (President, Weather Innovations, Ontario, Canada).

The second panel discussion, Livestock Insurance: Successes and Challenges, was moderated by Keith Coble, W.L. Giles Distinguished Professor of Agricultural Economics, Mississippi State University, Mississippi, USA. With a Canadian perspective, discussants shared their views, including Rosser Lloyd (Director General, Agriculture and Agri-Food Canada, Ontario, Canada), Harvey Sasaki (President, Agri-Saki Consulting Ltd, BC, Canada), Andrew Dickson (General Manager, Manitoba Pork Council, Manitoba, Canada), and Gary Hutchings (Agriculture Specialty, Aon Benfield London, London, UK).

The final panel of the day featured keynote, Dr Guangwen He, Professor and Department Head, Department of Finance, and Director of Center for Rural Finance & Microfinance Research, China Agricultural University, China, with a paper on How to Deal with the Risk of Collateral-Free Lending in Rural China. The panel focussed on Building Financial Capital in Agricultural Insurance Markets, which was moderated by Calum Turvey, W.I. Myers Professor of Agricultural Finance, Charles H. Dyson School of Applied Economics and Management, Cornell University, NY, USA. The panel included five discussants with international expertise on the subject, including Sanlie Middleberg (Assistant Professor, School of Accounting Sciences, North-West University, South Africa), J.P. Gervais (Chief Economist, Farm Credit Canada, Montreal, Canada), Qiao Zhang (Professor and Director of Agricultural Information Institute, Chinese Academy of Agricultural Science, Beijing China), Michael Roth (Senior Underwriter, Q-Re, Zurich, Switzerland), and David Oppedahl (Senior Business Economist, Economic Research Department, Federal Reserve Bank of Chicago, Chicago, USA).

The second day of the conference kicked-off with a discussion panel on Agricultural Insurance Ratemaking: Actuarially Sound and Long-Term Sustainability, which was moderated by Ken Seng Tan, Professor and University Research Chair, Department of Statistics and Actuarial Science, University of Waterloo, Ontario, Canada. The panel discussants included Remi Villeneuve (Chief Actuary, Agriculture and Agri-Food Canada, Ontario, Canada), Misha Novakovic (Class Underwriter, Catlin Specialty Insurance Company, Bermuda), Vitor Ozaki (Professor, Department of Economics, Business and Sociology, University of Sao Paulo, Brazil), and Andrea Shi (Vice President Agriculture, Toa Re, California, USA).

The fifth panel discussion was opened by Barry Barnett, Professor, Mississippi State University, Mississippi, USA, on Multi-Peril Crop Insurance: Successes and Challenges. Dr Barnett's keynote is also published in this issue of AFR. The panel was moderated by Milton Boyd, Professor, Department of Agribusiness and Agricultural Economics, University of Manitoba, Canada, and the four discussants included Rosser Llyod (Director General, Agriculture and Agri-Food Canada, Ontario, Canada), Joseph Glauber (Chief Economist, US Department of Agriculture, USA), James McCarney (Managing Director, Guy Carpenter & Company, Ontario, Canada), and Neil Hamilton (CEO, Manitoba Agricultural Services Corporation, Manitoba, Canada).

The conference heard closing remarks by Bruce Stephen, Director, ARI, Agriculture and Agri-Food Canada, Ontario, Canada, who spoke about the ARI program in more detail, including the intent of the program to support research and development, as well as the implementation and administration of new risk management tools for the agriculture sector, as well as the application process, eligibility, etc. IARFIC concluded with an exceptional Farms of the Fraser River Delta Tour, which was graciously organized by the B.C. Ministry of Agriculture Business Risk Management Branch. On a beautiful sunny Vancouver afternoon, conference guests visited blueberry farm, Randhawa Farms Ltd, Delta BC, and cranberry farm, Mayberry Farms Ltd, Richmond, BC.

As the guest editors of this Special Issue of Agriculture Finance Review, and Co-Chairs of the Second Annual IARFIC, we would like to extend our thanks to the IARFIC Scientific Committee, research paper presenters, panel discussants, all of our attendees, as well as our sponsors (Department of Statistics and Actuarial Science, University of Waterloo; Marsh & McLennan Companies). We would also like to acknowledge a very special guest, Raúl López Mercado, Minister of Agricultural Ministry of Mexico in Canada. Finally, we would like to extend recognition to the Canadian Federal Agriculture Minister, Honorable Gerry Ritz, who has continued to show great support for innovation in agricultural risk management and the insurance sector.

Join us at the next IARFIC where you will enjoy meeting with old friends and making new contacts, which will be held at the new Allianz Suisse Headquarter in Wallisellen, Switzerland, from June 22 to 24, 2014. Thank you to our generous 2014 sponsors, including Allianz Re and Guy Carpenter & Company. For more information regarding IARFIC, as well as updates on future conferences please visit: www.iarfic.org

Lysa Porth
Warren Centre for Actuarial Studies and Research and Department of Statistics and Actuarial Science, University of Waterloo, Waterloo, Canada

Ken Seng Tan
Department of Statistics and Actuarial Science, University of Waterloo, Waterloo, Canada and China Institute of Actuarial Science, Central University of Finance and Economics, Beijing, China