Crop Insurance in Argentina:
La Dulce Cooperative
William Edwards
Iowa State University
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
Policies, Premiums and Indemnities
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
77 %
50 %
Types of Coverage Offered
There are 27 ag insurance companies in Argentina.
•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
Types of Perils Covered
Multiple Peril
3%
Hail and Wind
48%
Hail Only
49%
Hail and Wind Damage
Crops Insured by La Dulce
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Soybeans
Corn
Sunflowers
Wheat
Barley
Oats
Rye
Flax
Canary grass
Peas
Setting the Guarantee

Producer chooses the number of
quintals per hectare to insure

Minimum and maximum by crop, zone

No production history needed

Can choose deductible, 0% up to 40%
Setting the Premium

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Premiums are fixed as a percent of the
value of the coverage, by each company
Discounts for higher deductibles
Deductible
Discount
.
10%
20%
30%
40%

Small Grains
20%
34%
45%
52%
Course Grains
22%
38%
50%
59%
Price is the average price at the port
during the last 10 days before:
• January 20 for small grains
• May 10 for corn, soybeans, sunflowers
Setting the Premium
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Discount of .25% for each year
affiliated with the cooperative
Discounts for repeat customers
Excess premiums are rebated to
members at the end of the year or
invested in the foundation
Calculating the Indemnity
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Percent damage is determined by the adjustor.
Looking at using satellite photography.
Indemnity = production guarantee
x area insured
x price at harvest
x % damage (> deductible)
Deductible disappears as % damage increases.
Zero at 95% damage or higher.
Swiss and German reinsurance companies
Example: Soybeans
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Coverage: 35 quintals/ha. (51 bu/a)
Price is 77 pesos/quintal ($7 / bu)
Coverage value is 2,695 P/ha ($359/a)
20% deductible
Premium is 2.42% of coverage value
Premium =.0242 x 35 qtl. x 77 = 65 p
($8.70 per acre)
Example: Soybeans
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Assume hailstorm causes 50% damage
Deductible shrinks to 12.5%
Payment = (50% -12.5%) = 37.5%
x 2,695 P/ha = 1,011 P/ha
($134.75/a)
Comparison of Premiums ($ per acre)
Corn
80%
70%
60%
Soybeans
80%
70%
60%
Wheat
80%
70%
60%
La Dulce
$8.48
$6.86
$5.64
SW Iowa APH
$15.28
$7.25
$3.79
$7.62
$6.14
$5.04
$9.12
$3.80
$1.75
$5.24
$4.38
$3.81
$11.00
$6.65
$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%
Crop Insurance Coverage by Province
Province
Premiums
Indemnities
Córdoba
33 %
37 %
28 %
25 %
Buenos Aires
32 %
30 %
39 %
38 %
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%
Santa Fe
Hectares
Capital Insured
Percent of Farmers Who Purchased
Crop Insurance the Previous Year
70
Year
%
58
60
1999
36,8
2002
44,9
52
44.9
50
36.8
40
30
20
2003
58,0
2004
52,0
10
0
Año 1999
Acres Farmed
TOTAL
Less than 500
From 500 to 1,500
More than 1,500
Año 2002
Año 2003
% who purchased insurance
52
43
54
62
Año 2004
Hectares insured by La Dulce Cooperative since 1970
600.000
Record Hectares Insured: 512.776 Has
500.000
400.000
300.000
200.000
100.000
0
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 of Grains Insured
180.000
160.000
Soybeans: 162.624 Has
140.000
120.000
100.000
Sunflowers:
59.714 Has
80.000
60.000
40.000
Corn: 28.180 Has
20.000
0
1
2
3
4
5
6
7
8
9
1
11
1
1
1
15
1
17
0
2006 - 2007
700
600
500
2005 - 2006
353
2004 - 2005
300
2003 - 2004
352
2002 - 2003
2001 - 2002
00/01
99/00
110
98/99
292 282 301
97/98
96/97
95/96
400
300
94/95
93/94
91/92
90/91
89/90
88/89
87/88
43 38 40 46 19 22
73
92/93
200
100
86/87
Number of New Members
Socios Nuevos
647
504
314
92 119 108 106
Guillermo Thomas, General Manager
Use 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
Town Library and Bookmobile to Smaller Communities
Cultural Foundation
Student competition for technological innovation
Foreign
Experts??