Introduction – 2014 International Agricultural Risk, Finance, and Insurance Conference (IARFIC)

Citation

Porth, L. and Tan, K.S. (2016), "Introduction – 2014 International Agricultural Risk, Finance, and Insurance Conference (IARFIC)", Agricultural Finance Review, Vol. 76 No. 1. https://doi.org/10.1108/AFR-05-2016-0049

Introduction – 2014 International Agricultural Risk, Finance, and Insurance Conference (IARFIC)

Article Type: Guest editorial From: Agricultural Finance Review, Volume 76, Issue 1.

Agricultural risk management and 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 risk management and insurance system in place in a global context. As agricultural risks have become more complex, foundations from key areas such actuarial science and agricultural economics have become increasingly important to help ensure the long-term benefits of agricultural risk management and insurance.

The IARFIC aims to facilitate important and timely discussions regarding agricultural risk management and insurance, through bringing together leaders across the globe and across disciplines, including agricultural economics, actuarial science, finance, statistics, and risk management. IARFIC serves as an important platform for the widespread and in depth dispersion of novel work and ideas. Collaboration is essential for maximizing the potential of innovative scientific research in addressing global challenges. The collaboration of academia, government, the private sector, NGO’s, and other stakeholders ensures that critical up to date information is received from and sent through important channels toward improving food security.

Following the tremendous success of IARFIC 2012 held in Beijing, China, IARFIC 2013 in Vancouver, Canada, IARFIC 2014 held in Zurich, Switzerland, IARFIC 2015 in Washington, DC, USA, did not disappoint! Washington, DC was an ideal location for the conference, serving to highlight the important title the USA holds as the largest crop insurance program in the world. The conference attracted approximately 150 registrants from June 16 to 18th, with representation split equally among academics and industry and government personnel. The focus of the conference was on innovative research, policy discussions, and business challenges and successes pertaining to agriculture. Four plenary sessions and four keynotes were featured, including topics on big data, improving agricultural insurance ratemaking, update and innovation from China, and agricultural insurance and the way forward. In addition to the plenary sessions and keynotes, registrants also heard more than 50 comprehensive and innovative research presentations in the concurrent sessions.

IARFIC 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 the Warren Centre for Actuarial Studies and Research and Department of Agribusiness and Agricultural Economics, University of Manitoba, Canada. Conference sponsors and partners included: Guy Carpenter & Company, Emerald Publishing; and American Agricultural Economics Association. Also, special recognition to Keith Coble, Department of Agricultural Economics, Mississippi State University, USA, for your extreme efforts to make IARFIC an exceptional experience!

The conference opening ceremony heard remarks by the IARFIC co-Chairs, Lysa Porth, Assistant Professor and Guy Carpenter Chair in Agricultural Risk Management and Insurance, Warren Centre for Actuarial Studies and Research, University of Manitoba, Canada, and Ken Seng Tan, University Research Chair Professor, Department of Statistics and Actuarial Science, University of Waterloo, Canada. The co-Chairs discussed the importance of agricultural insurance and risk management, and the important role that IARFIC plays in bringing together experts in the field to contribute to improving global food security. Following, Junsheng Li, Deputy President and Professor, Central University of Finance and Economics, Beijing, China, gave a warm welcome to guests. Next, Tom Zacharias, President, National Crop Insurance Services (NCIS), Kansas, USA, gave an important overview of the US crop insurance program and welcomed international participants on behalf of the NCIS.

The morning session continued with Keynote Speaker Joshua Woodard, Assistant Professor and Zaitz Family Ses-quicentennial Faculty Fellow in Agricultural Finance and Business, Charles H. Dyson School, Cornell University, USA, with a presentation on “The big data integration and analytics revolution in agricultural finance, risk and insurance.” Participants particularly enjoyed hearing about the big data efforts Joshua has led at Cornell University. Following Dr Woodard’s keynote, Moderator Barry Barnett, Professor, Mississippi State University, USA, led a panel on big data: technical and policy challenges. Discussants included: John Anderson, Deputy Chief Economist, American Farm Bureau Federation, USA; Keith Coble, W.L. Giles Distinguished Professor of Agricultural Economics, Mississippi State University, Mississippi, USA; Robert Johansson, Acting Chief Economist, Office of the Chief Economist, USDA, USA, and Thomas Worth, Senior Actuary, Risk Management Agency, USDA, USA. The session touched on the promise that big data analytics holds for farmers, helping to turn information into insights. Participants also heard how big data facilitates evidence based decision making, connects and empowers people, and contributes to developing integrated solutions to complex problems. A large focus of the panel discussion was on the potential benefits and challenges associated with emerging big data technologies in agriculture, including the accessibility of data and what role government should play in regulation.

After a brief Networking and Refreshments Break, sponsored by Guy Carpenter & Company, the morning continued with the first break-out session of research presentations. Lunch for participants was served next, followed by the second and third break-out sessions of research presentations. A Networking and Refreshment Break followed, leading into the much anticipated second keynote by Bruce Sherrick, Professor and Director, TIAA-CREF Centre for Farmland Research, University of Illinois at Urbana-Champaign, on Crop Insurance Programs: loss performance and ratings implications.

Following the presentation by Bruce Sherrick, the China: update and innovation plenary session was moderated by Blanca Qin, Senior Vice President, Guy Carpenter & Company, China. China’s insurance market is one of the largest and fastest growing in the world, which is fueled by the world’s second largest economy, with an average 10 percent GDP growth over the last 30 years. From a class of business perspective, agriculture has recently seen substantial increases in government subsidies, and has been an increasingly profitable business for insurers. China’s market for crop insurance has boomed since subsidies were introduced in 2007. The discussants included Yu Cai, Deputy Secretary General, The Insurance Society of China, China; Junsheng Li, Deputy President, Central University of Finance and Economics, China; Qiao Zhang, Professor, Chinese Academy of Agricultural Sciences, China; and Qidan Zhu, Senior Agricultural Underwriter, China Pacific Property Insurance Co., China.

The first day of the conference wrapped up around 6:30 p.m. Participants then attended the pre-conference reception in the drawing room of the Park Hyatt Hotel, followed by a Gala Dinner in the Gallery Ballroom. Guests had the opportunity to network, making new connections and catching up with old friends.

The second day of the conference opened with coffee/tea and light breakfast snacks. Participants gathered in the galley ballroom for a special and technical session on quantitative finance in agriculture. The special session was organized and moderated by Calum Turvey, W.I. Myers Professor of Agricultural Finance, Charles H. Dyson School of Applied Economics and Management, Cornell University, USA. Due to travel difficulties, Hirbod Assa, Assistant Professor, University of Liverpool, UK, was not able to join us as expected, and so Calum Turvey delivered Hirbod’s presentation on financial engineering in agricultural finance and insurance. Following, Tom Sproul, Assistant Professor, University of Rhode Island, USA, presented does size matter? Time scale and fractionality in commodity prices. Next, Calum Turvey discussed Ito excursion theory and commodity price bubbles (or Hurst and Hogs). The session was closed by Gabriel Power, Associate Professor, Laval University, Canada, with a discussion of quantitative finance and financial engineering in agriculture.

The morning session continued with a plenary session on improving agricultural insurance ratemaking. A scientific ratemaking methodology is fundamental for constructing sustainable solutions. Absence of actuarial methods to achieve accurate and fair premium rates limits the development of agricultural insurance and reinsurance programs. A robust pricing framework may help lead to steady underwriting performance and improved profitability over the long term. This is particularly true for heavily subsidized crop insurance programs, since marginal adjustments in premium rates may significantly impact participation rates, government expenditures, profitability and sustainability. The session was moderated by Dr Calum Turvey, W.I. Myers Professor of Agricultural Finance, Charles H. Dyson School of Applied Economics and Management, Cornell University, USA Discussants included: Auguste Boissonnade, Chief Technology Officer, Asia Risk Centre, USA, Barry Goodwin, William Neal Reynolds Distinguished Professor, University of North Carolina, USA, Andreas Rohm, Vice President, Munich Reinsurance America, USA, Bruce Sherrick, Professor, University of Illinois at Urbana-Champaign, USA, Andrea Shi, Vice President Agriculture, The Toa Reinsurance Company of America, USA, and Remi Villeneuve, Chief Actuary, Agriculture and Agri-Food Canada (AAFC), Canada.

A networking and refreshment break followed the morning session, and the conference continued with the fourth break-out research presentations. Lunch was served next, and then participants departed by bus to Capitol Hill for a very special venue to close the conference. The fourth keynote and plenary session regarding business risk management in agriculture: policy perspective, was hosted at the US Senate Committee on Agriculture. Participants were welcomed by Joel Leftwich, Majority Staff Director, US Senate Committee on Agriculture, Nutrition, and Forestry; Matt Erickson, Majority Chief Economist, US Senate Committee on Agriculture, Nutrition, and Forestry; and Joseph Shultz, Minority Chief Economist, US Senate Committee on Agriculture, Nutrition, and Forestry. Next, Tim Gannon, Associate Administrator, Risk Management Agency provided an overview of the US crop insurance program.

Following, we were delighted to welcome Joseph Glauber, Senior Research Fellow, International Food Policy Research Institute, USA, as our fourth keynote. As former Chief Economist of the USDA from 2008 to 2014, Joe Glauber provided a very interesting perspective regarding The Federal Crop Insurance Program – 15 years after ARPA. Following this, G. Cornelis van Kooten, Canada Research Chair in Environmental Studies, University of Victoria, Canada, moderated the fourth panel on business risk management in agriculture: policy perspective. The session focussed on the agriculture risks faced by producers today, and discussed the complexities faced in terms of increased international competition, technological improvements, higher food safety standards, better environmental practices, moral and ethical questions, and greater diversity than ever before. This changing environment is demanding new approaches to how business is conducted on the farm, and how governments conduct agricultural policy. For some countries, the approach has been to increase subsidies to agriculture. For other countries, the approach is different. The discussants tackled the difficult question regarding what is the next step in the evolution of business risk management? The discussants included Mary Bohman, Administrator, Economic Research Service, USDA, USA, Dale Moore, Executive Director, Public Policy American Farm Bureau, USA, Brett Maxwell, Senior Policy Analyst, AAFC, Canada, Frieda Krpan, Chair, Board of Manitoba Agriculture Services Corp., Canada, Martin Buehler, Principal Insurance Officer, Financial Institutions Group, IFC, USA, Thomas Worth, Senior Actuary, Risk Management Agency, USDA, USA, and Bruce Stephen, Director, AgriRisk Initiatives, AAFC, Canada.

Following the last plenary discussion and keynote, participants were welcomed to the House Agriculture Committee Meeting Room, 1301 Longworth House Office Building for a reception and welcome remarks by Bart Fischer, Chief Economist, Committee on Agriculture, USA House of Representatives.

As the co-Chairs of IARFIC 2015, and Guest Editors of this issue of the Agricultural Finance Review, we thank you for your continued support and contribution to comprehensive discussions and innovative research regarding agricultural risk management and insurance. A very special thank you to the organizing committee, including Milton Boyd, University of Manitoba, Canada, Keith Coble, Mississippi State University, USA, and Jean Webster, University of Waterloo, Canada. In addition, thank you for the hard work of the IARFIC Scientific Committee. We hope you enjoyed the conference, and we look forward to seeing you the fifth IARFIC to be hosted in Beijing, China in June 2017!

Lysa Porth and Ken Seng Tan - Department of Statistics and Actuarial Science, University of Waterloo, Waterloo, Canada