Experiences in agricultural insurance and credit in Québec December 8, Marc Ferland Vice-president

Transcription

1 Experiences in agricultural insurance and credit in Québec December 8, 2009 Marc Ferland Vice-president

2 Presentation Outline 2 1: Québec s Agricultural and Agri-Food Industry 2: La Financière agricole du Québec 3: Financing products 4: Insurance and Income Protection 5: Other Activities 6: Overview of the Origin and Use of Funds

3 Part 1: Québec s Agricultural and Agri-Food Industry Overview of Farmland Boundaries Oceans Lakes and rivers Percentage of cultivated area 0 NA > 0 and <= 20% > 20 and <= 40% > 40 and <= 60% > 60 and <= 80% > 80 and <= 100% 3

4 Part 1: Québec s Agriculture and Agri-Food Industry Farm Revenues Per Production (2008) Other crops 17% Financial support 15% Milk 26% Corn/Soybeans s 11 % Other animal productions Poultry 10% Pork 13% Total revenues CAN $ 7,5 billions 9 % 4

5 Part 1: Québec s Agricultural and Agri-Food Industry Average Value/Farms (with revenues of $10,000 and + ) 2007 Net value $ Quota $ Land Land and buildings $ Liabilities $ Other assets $ Some farms 5

6 Part 1: Québec s Agricultural and Agri-food Industry Trade in Agri-Food Products (2008) Exports ($million) Cereals and oilseeds 530 Pork industry Dairy industry 148 Beverages 213 Fruits, vegetables and preparations 471 Fish and seafood 225 Maple products 228 Other Total Imports ($million) Fruits, vegetables and preparations 975 Fish and seafood 302 Beverages 983 Cereal-based preparations 221 Edible meats and offal 116 Various food preparations 105 Dairy products 394 Other Total

7 7 La Financière agricole du Québec

8 Part 2: La Financière agricole du Québec Mission Support and promote the development of the agricultural and agrifood sector within a broader perspective of sustainable development. Unique Partnership: State/Producers/Financial institutions/accredited accountants/etc. Financial resources stemming from: - Government of Québec - Federal government, for the administration of joint programs - Producers themselves: premiums and various fees 700 employees and 23 service centres 8

9 Part 2: La Financière agricole du Québec Financing: Office du crédit agricole (1936) Société de financement agricole (1993) Insurance: Régie des assurances agricoles (1976) Since 2001: La Financière agricole du Québec 9

10 Financing Products 10

11 Financing Products Loan Guarantees Eligibility: Businesses that are 60%-producer held Present perspectives for continuity Compliance to environmental standards and regulations Maximum: 5 million CAN$ per business (cumulative) Interest rates: Fixed: residential mortgage rate discount Variable: prime rate of financial institutions Built-in protection against major interest rate hikes 11

12 Producer: 0.5% of the amount borrowed generally paid all at once to La Financière agricole + amounts required by the financial institution Government: Annually pays an amount into a «loan insurance fund» to indemnify financial institutions in the event of losses Financing Products Lending Fees and Reserves Fund instituted pursuant to legislation: Regular actuarial evaluation (5-years) Premium rate: currently 1.43% of the year total loans Actuarial surplus of $80 million as of March 31,

13 Financing Products Key Figures for Nb of actual borrowers 15,170 Portfolio (CAN$M) 4,325 Authorized loans (CAN$M) 821 Credit lines(can$m) 42 Claims paid (CAN$M) 7 Claim rate/outstanding 0.17% Note: Such a low claim rate is mainly due to insurance protections 13

14 Financing Products Loan Amounts Granted In CAN$ to 50 K $ 100 to 150 K $ 200 to 250 K $ 300 to 350 K $ 400 to 450 K $ >= 500 K $ 14

15 Part 4: Our Insurance and Income Protection Products AgriStability(federal-provincial) AgriInvest (federal-provincial) Crop Insurance(federal-provincial) Stabilization Insurance (Québec only) 15

16 Our Insurance Products AgriStability Principle: Both governments and the farm producer share the costs to stabilize the operation s annual income for the producer (all farm productions combined= wholefarm concept) In general, when the program is triggered, it covers a portion of a difference of more than 15% between the operation s production margin for the current year and its reference margin (5-year Olympic average) Cost share: Governments and producer (60%-40%) and 0,45% of the reference margin 16

17 Part 4: Our Insurance Products AgriInvest Principle: Enables participants to annually deposit up to 1.5% of their average net sales of allowable products into an account and to receive a matching amount from the governments - Net sales are adjusted to take into account income from supply-managed products Participants may withdraw money anytime, based on their operation s needs 16

18 Part 4: Our Insurance Products Crop Insurance Principle: Covers crop loss due to unfavourable weather conditions or uncontrollable natural phenomena ( multi-risk coverage ) Productions: Most plant productions ( Different options (individual or collective) Different benefit levels ( % of the loss) Cost share: Governments and producer (60/40%) Total premium for 2009: 6,5% of the insured value 18

19 Part 4: Our Insurance Products Stabilization Insurance Principle: Aims to guarantee a net annual income -Compensation if the average selling price does not make it possible to cover the production cost -Production cost established by the Centre d'études sur les coûts de production en agriculture (CECPA), after surveying specialized farm operations + annual revisions and adjustments Productions: 16 animal and plant productions Cost share: Governments and producer (2/3-1/3) N.B.: Companion program 19

20 Part 4: Our Insurance Products Key Figures for Agri Stability Agri Invest Crop insuran ce Stab. insuran ce Clients 20,537 21,089 13,050 16,426 Insured values n/a n/a Close to $5 billion 20

21 Part 5: Our Other Activities 21

22 Part 5: Our Other Activities Financial Support Program for Aspiring Farmers Eligibility: Is between 18 and 40 years old Has recognized training (level 1, 2 or 3) Holds at least 20% in the operation s shares Has one year of experience in agriculture Project shows perspectives for continuity Support matches training level Cost: CAN$12 million a year (some 450 young people) 22

23 Part 5: Our Other Activities Geomatic Applications Objectives: Support the insurance programs Accurately determine land-related data to reinforce connection with producers Use spatial information that matches descriptive data 23

24 Part 6: Overview of the Origin and Use of Funds in Origin of funds (±$850 million) Use of funds Prod. 23% Other 6% Québec 38% ASRA 47% AgriStability 17% Agri- Invest. 11% Federal 34% Adm. and other 12% Special prog. 4% ASREC 7% Finan. 2% 23

25 Summary La Financière agricole: A unique partnership, motivated by the desire to promote sustainable development in the sector La Financière agricole: One-stop counter offering a full range of complementary financial services for producers Insurance and income protection programs (4) Responsible friendly financing at an affordable cost Unwavering support for aspiring farmers Representatives who are specialized in agriculture Financière agricole du Québec-Développement international Sharing know-how and guiding agencies on an international scale 25

26 Financière agricole du Québec Développement international Know-How For Transforming Agriculture Range of services offered: Farm financing Insurance and income protection Development of geomatics and information systems Production cost studies 26

27 Source: oxfam.org.uk Source: un.org Source: farmlandgrab.org Source: wn.com

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