FIELD CROPS

 

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As an agricultural cooperative or an agribusiness, your remuneration is set notably by the determined margin that your take by the ton and by the type of culture.  Accordingly you are exposed to the yield: if the yield decreases, so will your remuneration.

 

Even if there is a quantity commitment from the farmer or the agribusiness in your production contracts, it will be a commitment to a security tonnage that will always be lower than the forecasted tonnage because they do not want to incur a loss due to the increased financial cost caused by a yield drop.

 

If you cover yourself with an insurance contract that is based on the yield by type of main cultures (wheat, corn, etc.), you protect yourself in the case of a drop of the yield, and possibly you can pass on this guarantee in your production contracts.  This should enable you to win over new clients and to gain the loyalty of your existing clients.  It is a considerable advantage for a farmer or an agribusiness to have a yield that would be guaranteed by the cooperative or by the food-processing business.  Moreover, this would enable you to raise your turnover substantially and earlier in the year.  In fact, the farmer or the agribusiness will be inclined to sell most of his crop at a guaranteed yield rather than selling by the security tonnage.

 

However, you can also be exposed to other risks, such the price risk.

With the price risk, you can be exposed to:

- an increase in the prices, especially if you have sold well upstream to one of your clients a certain amount at a determined price, and in case of a drop in the yield, you must purchase at a higher market price the necessary quantity to honor your commitment.

- a drop in the prices, especially if you offer purchase prices to your members/suppliers that are higher than the market prices which might drop later on.

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Moreover, the cooperative or the food-processing business can also insure itself on behalf of its suppliers and therefore guarantee their turnover or possibly a determined capital that might represent what the suppliers wish:  turnover, charges, etc.

 

Each cooperative or food-processing business has its own issues.  You can entirely trust us to work out a tailor-made insurance contract.