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SystemAgro

The integrated approach to help farmers feed the world through an intelligent crop insurance system

Around a billion people in the world go to bed hungry every night. And with the world’s population expected to rise by a third to some 9 billion by the year 2050 and demand for agricultural raw materials set to increase by 70% in the same period, the outlook for the future is bleak. In fact, the supply situation in many countries has already reached critical proportions today. It is no wonder then that world conferences like the FAO World Food Summit in Rome or the Climate Conference in Stockholm are desperate to find solutions to this problem.

Farmers around the world are urgently calling for solutions that not only have an impact at a global level but above all have a direct positive effect on their own farms. After all, agricultural raw materials secure life – the livelihoods of the farmers, the lives of a nation’s people and the entire global population.

“Food, feed, fibre, fuel” – a farmer’s life is all about producing food, feed for livestock, fibres for industrial purposes, and agricultural raw materials needed to produce biofuels. Demand for these agricultural raw materials is growing fast. At the same time, the risks farmers face are also growing: to meet demand, they need to increase their production and by investing in their farms. But to do this, they need financial stability.

However, this financial stability is becoming increasingly elusive. Today, farmers are finding it more and more difficult to rely on their stable crop yields. The effects of climate change – floods, late frost, drought and storms – can result in highly volatile crop yields for farmers and bring them to the brink of ruin. They take considerable risks when investing in their future. In this situation, it is vital that farmers get support in facing a higher frequency of extreme weather events.

Governments and insurers need to create financial stability soon. What is needed is a well thought-out crop insurance system that supports farmers in the long term and thus also secures the future of us all.

The solution
To meet the long-term demand for food, it is necessary to have comprehensive risk management tools helping farmers in their business. We see public-private partnerships (PPP) as the strongest possible basis for an intelligent solution, in which farmers, government and the insurance industry work together. The advantages of a public-private partnership have also been acknowledged at the highest levels: at the World Climate Summit in Copenhagen in early December 2009, Lord Nicholas Stern called the PPP approach absolutely essential. Farmers hit by the effects of climate change would be able to cope much better with the help of good risk management tools. At the same time, insurance solutions can foster more rapid economic recovery, believes Stern.

This is the basis of SystemAgro. Successful crop insurance systems have been in use for over 35 years and provide insurance coverage for more than 200 million hectares. Munich Re has analysed these systems and included the most successful aspects in SystemAgro. This system is the optimal solution to help farmers face the challenges of the future.

Thanks to its customised structure for each country, SystemAgro stabilises the agricultural sector in the long term. It secures farmers’ livelihoods, regardless of the exposure they face or the type of agricultural production involved. The system is available to all farmers and its centralised structure makes it especially transparent and efficient.

What Munich Re offers
Munich Re brings farmers, government and specialist insurers together and uses SystemAgro to develop the best-possible sustainable solution, which draws on our wide-ranging expertise and global business partnerships.

 

Munich Re combines high-tech components such as precision farming, remote sensing and state-of-the art harvest technology to be able to implement SystemAgro in any region of the world for any size of farming operation.

 

If you require more detailed information, our experts are available for more in-depth discussion.

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This publication is available exclusively to Munich Re clients. Please contact your Client Manager.