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Long-term food security is one of the biggest challenges of our time, as drought, flooding and frost have become more intense and more frequent, triggering severe crop losses in many countries. In 2012 alone, droughts caused a decline in corn and soybean yields of up to 20% in the United States and a drop in corn, cotton and sugarcane yields of up to 40% in Brazil.

At the first Brazilian agribusiness event hosted by Swiss Re Corporate Solutions in São Paulo, stakeholders met to discuss the challenges of food security. As agriculture experts José Cullen and Bernard Belk stressed, Swiss Re is committed to supporting food security by providing farmers and the agricultural supply chain with risk transfer solutions that enable them to increase productivity.

Ensuring business continuity

Risks in the agricultural supply chain range from the provision of supplies to farmers' income and grain processing. To ensure business continuity and the sustainable development of agribusiness, virtually any loss can be covered by insurance – including the shortage of raw materials, insufficient transportation logistics and crop shortfall.

Farm revenue insurance is a particularly effective tool covering farmers against the loss of profitability due to a shortfall in production, a drop in commodity prices or a drop in local currency relative to the US dollar.

Boosting agricultural productivity

Roberto Rodrigues confirmed the potential of agribusiness in Brazil. He referred to a 2010 OECD study which forecasts a 20% increase in world food production by 2020 and projects that Brazil will be the largest food supplier by then, accounting for 40% of global output.

And output will have to be stepped up even further, a recent sigma study by Swiss Re confirms. Population growth, changing food preferences towards higher meat consumption and the overall increased demand for crops, livestock and biofuel pose new challenges to agriculture. In this respect, said Rodrigues, "Brazil has done its homework." Government data reveal that in the past two decades, grain production in the country has grown by 220%, with productivity rising by 129% and the cultivated area expanding by 40%. With arable land becoming more and more scarce, increased productivity will be key.

Focusing on three key success factors

According to Rodrigues, the favourable outlook for Brazilian agribusiness stems from three factors: available land, human resources and technology. "No other nation in the world has all three assets," he assured. However, the country also faces a set of challenges. To benefit from the growth potential in agribusiness, Brazil would need to adopt a national strategy to incorporate credit and insurance and to ensure legal security through associations and cooperatives.

Fostering the success of cooperatives

More than 1 billion farmers around the world have joined cooperatives by now. In Brazil, more than 10 million belong to 6,500 cooperatives. The largest one in the country and in whole Latin America is Coamo, with more than 25,000 members and nearly 6,000 employees.

At the Swiss Re Corporate Solutions event, José Aroldo Gallassini, president of the agricultural cooperative Coamo, emphasised the importance of insurance for farmers. "I am an advocate of the benefits of insurance because I think it offers the best guarantee against loss. Moreover, the more farmers cover their risks by insurance, the sharper the rates will fall and the lower and more attractive the price will be."

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