Navigating risks for global food securityJuerg Trueb, Head of Environmental and Commodity MarketsPalm Beach Strategic Forum, 7-8 April 2014Navigating risks for global food securityJuerg Trueb, Head of Environmental and Commodity MarketsPalm Beach Strategic Forum, 7-8 April 2014
Palm Beach Strategic Forum | Juerg Trueb | 7-8 April 2014
Are we ready to face the food security challenge; or how can business help?
900 million people suffer hunger, 98% thereof in Asia and Sub-Saharan Africa
1 in 8 people in emerging markets suffer from hunger/malnutrition
74% increase in global food prices since 2005 has made food unaffordable for many
15% of US households suffered from food insecurity in 2010; food insecurity is a not just an emerging market issue
60% increase in world agricultural production by 2050 needed demand (population growth, shift of diet)
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Palm Beach Strategic Forum | Juerg Trueb | 7-8 April 2014
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Increase productivity through shift from subsistence to commercial farming
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Industry effort: New Vision of Agriculture
Population growth
Changing food preferences
Government policies (e.g. biofuel)
Demand-side drivers
Loss and waste of food
Urbanization
Trade and government policies (e.g. subsidies, trade restrictions)
Natural resource constraints (water, land)
Climate change, natural disasters
Commodity prices
Supply-side factors
Increase productivity
Insurance sector:
Risk management as a pre-requisite for access to production credits
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Palm Beach Strategic Forum | Juerg Trueb | 7-8 April 2014
Impact of climate change on agricultural production - Recent examples of weather impact
20% of sown area destroyed; 40% production (relative to 2009) lost; USD 1.4 billion direct losses; corporate farmers defaulted on production loans; Medvedev extended USD 1.3 billion in credit Russia banned grain exports triggering export restrictions elsewhere Grain handlers (domestic & international) stopped operations; importers faced force majeure; processors ran at reduced capacities Record food prices in 2010/2011 adding millions to the ~870 million already starving from hunger
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Palm Beach Strategic Forum | Juerg Trueb | 7-8 April 2014
Worldwide agricultural insurance premiums
USA & CanadaUSD 10,7 bn (55,0%)
Latin AmericaUS$ 0.87 bn (4,0%)
EuropeUSD 3,9 bn (20,1%)
AsiaUS$ 3,8 bn (19,5%)Africa
USD 0.09 bn (0,5%)
Australia & NZUS$ 0.2 bn (0,9%)
1) Brazil, Russia, India, China, South Africa
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Client and product focus (marked red)
Governments
Insurable Interest
Financial Institutions:• Credit risk protection• Reinsurance
Governments:• Fiscal balance• Social balance
• Credit repayment• Product added value
• Revenue guarantee (throughput & margin)• Quality guarantee
• Revenue guarantee (throughput & crushing margin)• Raw material cost (volume & price)• Quality guarantee
1) By bundling insurance with goods and services of input providers
Client universe
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Palm Beach Strategic Forum | Juerg Trueb | 7-8 April 2014
Legal notice
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