International practice

Agricultural insurance from an Asian perspective: pathway to productivity

Agriculture is a high-risk sector. Farmers in Asia must cope with severe droughts, floods, typhoons, frosts/freezes, and other events that are increasing with climate change. The coronavirus pandemic brought an additional dimension to farmers’ risk exposure and endangered food security. Within a holistic risk management system, agricultural insurance plays an outstanding role. It mitigates the consequences of unpredicted losses, smooths income volatility, protects farmers from bankruptcy, and leads to improved productivity. It also helps to achieve the UN Sustainable Development Goals (SDGs). Agricultural insurance systems are not equally developed throughout Asia. Some countries like India, Japan, the Republic of Korea, the Philippines, and Turkey have undergone a long evolutionary process to establish efficiently functioning systems with significant market penetration. Other countries, particularly island nations, are still in the relatively early stages of agricultural insurance development. Agricultural insurance in Asian countries operates in the form of public schemes or public–private partnerships (PPPs). In other countries outside Asia, e.g., Australia and South Africa, agricultural insurance is operated as a purely private system. In Asia, governments subsidize insurance premiums and provide regulatory support, sometimes with coverage of catastrophic losses. Best-practice examples of public schemes are observed in Japan and the Philippines, and those of PPP in Turkey. Agricultural insurance has limitations and should be utilized as only one element of a broader holistic risk management strategy. The successful development of agricultural insurance requires substantial government commitment and investment. However, this investment will ultimately result in improved agricultural productivity, increased farmers’ resilience under adverse circumstances, stable national food security, and meeting the SDGs. BACKGROUND General overview of Asian agriculture In many low- and middle-income countries in Asia, agriculture continues to be an extremely important sector that contributes significantly to GDP while meeting basic needs for food and material. Agricultural operations in Asian countries are generally small scale and intensive with a high proportion of irrigated cropping in the winter dry season and monocrop cultivation of paddy rice throughout much of South Asia in the summer monsoon season. The livelihoods of many of the poorest households in the region are supported by off-farm employment and income that act as a buffer in the event of major catastrophic events (typhoons, floods, or tsunamis). Remittances from abroad are also very important in some Asian countries such as Bangladesh, Indonesia, Nepal, the Philippines, and Thailand. Agricultural productivity The agricultural industry worldwide is becoming more technological and input/outcome efficient. This trend includes adoption of precision farming, remote-sensing technology, and digital decision-making tools as well as the use of new, more resilient and productive seed varieties and other inputs. In some countries, small farms are merging into larger production units. Farm size matters. At the beginning of the growing season, farmers must invest in purchases of seeds, fuel, fertilizers, etc. Poor small farmers in Asia generally choose low-priced input supplies (seeds, fertilizers, etc.) of correspondingly lower quality. The final crop productivity outcome will also be marginal. While small farmers achieve average wheat or rice yield levels of 2 t/ha, larger, more sophisticated holdings can expect much higher potential crop yields of 9 t/ha for wheat and 6 t/ha for rice. The same holds true for dairy farming: differences in the milk yields between small and large operations can be as much as 5-fold. Low productivity only enables farmers to cover their initial investments (or production costs) but does not provide a sufficient margin for a decent life throughout the year until the next season’s harvest. Thus, farmers living on the edge of basic survival obviously do not have the resources to modernize their operations or to cope with unexpected disasters. In other words, they have little resilience in the face of adverse circumstances. Farmers’ risks The agriculture sector has always been prone to an astonishingly wide range of risks. Those risks potentially affect almost every aspect of their well-being: productive capacity; property and possessions; life and health; and financial future. The main category of risk is weather related such as droughts, hailstorms, floods, high winds, storms, and heavy frosts and freezes. When those weather events reach extreme magnitudes, they fall into the category of catastrophes, along with earthquakes and volcanic eruptions, for example. Climate change is increasing such risks in the form of later spring frosts, prolonged droughts, and heavier rains. Most farmers are aware that the weather patterns observed today were not seen even 10 years ago. The new climate also increases outbreaks of pests and diseases. As a result of all these, farm incomes have become more volatile and farmers more financially vulnerable. Agriculture in the Asian region is regularly exposed to major climatic risks such as typhoons, floods, droughts, and tsunamis. In the most northerly territories (e.g., Japan, Mongolia, and Nepal) agriculture is also at risk due to hail, frosts and freezes, and snowstorms. Other common risks faced by farmers are more sporadic and individual like fires or machine-related accidents, livestock loss, or personal injury/disability as a consequence of accident or disease. Disease outbreaks on neighboring farms or in the surrounding area are also potential causes of significant loss. Marketing-related risks include fluctuations in commodity prices and fuel and other input costs. Farmers may also be forced to cope with political risks when, for example, the government changes agricultural regulations or policies resulting in decreased subsidies or increased taxes. Some risks can cause income fluctuations, others lead to total income loss, and significant widespread risks like prolonged droughts or powerful typhoons lead to asset loss. For example, in case of severe drought and lack of financial resources for alternative animal feed, farmers are forced to sell their livestock and thus lose assets that could ensure sustainability. The COVID-19 pandemic The current coronavirus (COVID-19) pandemic is endangering agricultural production and threatening the food security of every country. This situation is especially difficult in Asia with its preponderance of low/middle-income farmers. Since April 2020, in addition to the usual natural disasters, farmers have faced substantial disruptions in agricultural value chains: markets where they sell their products have been closed; and roads and other transport modes have been shut down, with trucks filled with agricultural products abandoned in the middle of highways in some cases. Farmers could not hire the usual temporary labor for harvesting. While people were required to self-quarantine in isolation, farmers still had to tend their fields/gardens, potentially endangering their own and their families’ health. Input suppliers increased the prices of their products, and traders could not reach farms to buy produce. As a result, many farmers are now in dire financial straits and require external support in order to continue production in the next season. Risk management Farmers must rely on a wide range of strategies to manage risks in agriculture. One good strategy is operation and income diversification, sometimes known as farm fragmentation. Since agricultural production is always risky and farmers’ incomes always fluctuate, generating income streams from unrelated activities is beneficial. This can take the form of planting different types of crops (for example, field crops and orchards), balancing between crops and livestock, or supplementing primary production with food processing. Where farms are generally small, off-farm income sources are sometimes even better alternatives. When it comes to financial/market risks, good mitigating tools are hedging and futures. These financial tools can protect farmers from significant commodity price drops. However, hedging and futures remain more suitable for larger, more sophisticated farming operations than for family smallholdings. Crop modeling is the prediction of future yields based on weather forecasting, soil conditions, and crop variety. It helps farmers make the right agronomic decisions leading to the optimization of inputs and maximization of yields. Maintaining farm health and safety include fire and disease prevention measures. These contribute simultaneously to the health of plants, animals, and humans. However, informal or farm-based measures cannot provide protection against severe threats like typhoons, floods, tsunami, and droughts. Such disasters require market-based, institutionalized protection mechanisms like insurance, hedging, and government assistance. AGRICULTURAL INSURANCE: A MARKET-BASED TOOL FOR RISK TRANSFER Functions of insurance Insurance transfers risk to a professional carrier, i.e., an insurance company, which charges a fee for assuming it. Risks that cannot be overcome or avoided by individuals and could potentially cause devastating losses should be insured against. In the rural sectors of many countries, insurance is commonly linked to bank credit. In those cases, insurers pay compensation directly to banks to cover yield or livestock losses experienced by farmers who are insured, wiping out their debts to the banks. Generally, agricultural insurance has the following functions:protecting investments;reducing the severity of losses or mitigating the financial impact of losses on farmers;smoothing income volatility;allowing investments in new technology, thus improving productivity;reducing poverty; andprotecting against bankruptcy, which in some cases means saving lives (for example, preventing the all-too-common suicides of Indian farmers faced with total crop losses due to drought).Agricultural insurance can also help nations meet the SDGs by:increasing productivity;improving livelihoods;enhancing the resilience of farmers and communities in adverse circumstances; andadapting to new challenges like climate change or pandemics.Agricultural insurance enables farmers to remain creditworthy even in years of major crop loss and thus avoid falling into the poverty trap. Generally speaking, agricultural insurance can save farmers from bankruptcy and governments from default. It plays an important role in reducing the vulnerability of the national food system to acute shocks, subsequently contributing to resilience and sustainability. Agricultural insurance in Asia The Asian region contributes around 20% of global agricultural insurance premium payments. PR China, India, and the USA are the world’s three largest markets. Agricultural insurance systems in Asian countries differ and include public or PPP programs. Several countries have a long history of public-sector crop and/or livestock insurance, e.g., India, Japan, the Republic of Korea, and the Philippines. Their public-sector programs target small and marginal farmers and are heavily subsidized. In Japan, agricultural insurance dates back to 1929 and its national cooperative agricultural insurance system receives major financial support (subsidies) from the government. Approximately nine million crop and livestock insurance policies are sold each year in Japan, with the agricultural insurance premium volume reaching over USD1.3 billion. Other countries have introduced crop insurance rather recently, i.e., over the past 15 years. This includes Turkey, Thailand (since 2007), Nepal (since 2009), Indonesia (since 2010), and Vietnam (pilot tested since 2008). The Pacific Island nations are not well served from an agricultural insurance perspective, since very few currently have any form in spite of their very high exposure to natural hazards (typhoons, flooding, tsunami, and El Niño/ENSO-related droughts). Existing programs include both traditional and index insurance coverage, with the traditional form more prevalent. Weather index insurance was first introduced in India in 2003 and has reached commercial scale, while the Philippines adopted some weather-based index products for specific crops. Other countries are experimenting with attempts to develop and implement index coverage. Mongolia has an unprecedented livestock index insurance system. In all Asian countries, central governments play crucial roles in establishing and supporting agricultural insurance schemes. The most common form of state support is insurance premium subsidies as provided by governments in India, Indonesia, Japan, the Republic of Korea, Pakistan, the Philippines, and Turkey. In startup situations, where there is currently no agricultural insurance supply, governments can play a very important role in creating the necessary infrastructure, including: establishing and overseeing the legal and regulatory framework; enhancing weather station infrastructure and related data and information systems; carrying out insurance product R&D; and arranging education, training, and capacity building for insurers, distributors (banks, microfinance institutions, input suppliers), and farmers. In some situations, it may also be cost-effective for governments to provide high-level catastrophe reinsurance protection. PPP schemes in India India has a huge number (approximately 120 million) of smallholder farmers. Their usual risks are low rainfall, price volatility, very unstable income leading to high debt, water scarcity, and limited access to resources and healthcare. Other problems arise from natural disasters and biological factors. The COVID-19 pandemic made life even more challenging for Indian farmers. Due to quarantine restrictions, they could not hire seasonal workers for rabi (crops sown in winter and harvested in spring) seasonal harvesting and were unable to sell or deliver their products to final markets. They simultaneously experienced losses from hurricanes and locust outbreaks in some regions. Since 1979, India has had a subsidized public-sector area-yield index multiple-peril crop insurance (MPCI) scheme in place. In 1985, the Comprehensive Crop Insurance Scheme (CCIS) was introduced. The CCIS was replaced by the National Agricultural Insurance Scheme (NAIS) in the 1999/2000 rabi season. In 2002, the Agriculture Insurance Company of India Limited (AIC), a specialist public-sector crop insurer, was formed by the government. Private insurers started to enter the agriculture insurance business in 2001. The system that exists now was launched in 2016. Named after the Prime Minister of India, the Pradhan Mantri Fasal Bima Yojana Program currently generates around €3.5 billion in insurance premiums covering around 50 million farmers. However, the Indian government has a strategy to increase the market penetration. At its core it is a type of area yield index insurance with pricing and loss adjustment based on crop cutting experiments (CCE). The current program covers only crops but not livestock. The frame insurance terms and rules are defined by the government, partly at federal and partly at state level. State and private insurers are invited to participate in state tenders in order to receive regional allocations where the insurance is sold. Currently, 18 insurers participate in the program. The state subsidizes the insurance premiums, making prices affordable for farmers. In instances of devastating losses, the state provides reinsurance to insurance companies. The premiums are partially reinsured by the national company GIC, and the remainder by international reinsurers. As with any insurance program, India’s has its challenges: 60% of crops are still not insured, especially high-value ones; livestock is not covered by the subsidized program; and the way government tenders are made creates a certain amount of volatility in insurance portfolios, meaning that insurers experience problems with reinsurance placements. Public program in the Philippines The Philippines is home to 5.2 million smallholder farmers. Each year, an average of 22 typhoons hit the country, some of which cause devastating destruction to agriculture. Crop insurance was first introduced in 1978 with the formation of the Philippines Crop Insurance Corporation (PCIC). The PCIC is 100% owned by government entities and subject to legislation and regulations. The central government financed the PCIC’s startup costs, and its main ongoing support for agricultural insurance is through premium subsidies for the PCIC’s main lines of rice and corn insurance. The PCIC offers comprehensive insurance programs for crops, livestock, fisheries, credits, and properties or assets owned by farmers for which the premiums are fully subsidized. Many of those agricultural insurance products are index based. The levels of customer service provided by the PCIC continue to be recognized as excellent. The two main insurance lines are MPCI policies for palay (rice) and corn, which account for the majority of PCIC premium income. Coverage includes losses due to natural calamities and pest and disease outbreaks. The main causes of loss are typhoons, floods, and drought. Pests and diseases are also significant factors contributing to claims filed. The PCIC also offers high-value commercial crop insurance as well as life and accident insurance to individuals or linked to loans from financial institutions to farmers and fishery workers. Recent success in Turkey Traditional agricultural insurance began in Turkey in 1957, but only 0.5% of agricultural areas in the country were insured before the state underwriting agency TARSIM was established.The previous situation was considered too unstable to serve as an effective platform for further development. In 2005, the Agricultural Insurance Act was passed allowing PPPs in Turkey’s agricultural insurance sector. Following the Spanish model, there are three key elements in the system: 1) mechanisms for public–private dialogue; 2) continuous updating of insurance contents; and 3) development of policy tools for dialogue with the government. Currently, Turkey has a robust PPP system of agricultural insurance offering products on crops, livestock, greenhouses, and aquaculture with total insurance premiums of more than €230 million and around two million policies issued yearly. It is managed and administered by TARSIM. Insurance covers such risks as hailstorms, floods, storms, whirlwinds, fires, earthquakes, landslides, and frosts/freezes for crops and all mortality risks for livestock. The levels of risk vary considerably by region, by type of farm, and by size of operation due to the different topographies and climatic conditions prevalent in different parts of Turkey. TARSIM therefore offers variable insurance rates depending on geographic location and risk zone. Twenty-four insurance companies participate in the program and cede the collective risks to the TARSIM pool, which in turn obtains reinsurance. TARSIM develops and provides the insurance rates, underwriting guidelines, and entire loss-adjustment infrastructure. Due to its systematic, scientific approach, the Turkish agricultural insurance portfolio has demonstrated stable profitable growth over the last 14 years. Despite being a relative newcomer to the global agricultural insurance market, TARSIM has assumed the role of a knowledgeable leader that shares its experience with governments and experts in other countries. Limitations of agricultural insurance Policymakers and end users often perceive insurance as a universal remedy for all problems. However, it is not a panacea and cannot replace a holistic risk management system. Agricultural insurance also has limitations and can only address some of the multiple risks the sector faces. Agricultural crop insurance is a restricted instrument that addresses only production and yield losses due to weather, natural, and (occasionally) biological risks. Crop insurance provides limited coverage from the time of sowing/planting, to the occurrence of emergencies, to completion of harvest. It does not, however, usually cover downstream sources of risk including postharvest storage losses or market price fluctuations. Agricultural insurance usually does not cover risk from the ground up, as there is always a mechanism of self-retention in the form of deductibles. Farmers are responsible for controlling this self-retention mechanism through improved farm management. Insurance covers the risk in the middle. When the risk reaches a substantial level, insurance may no longer be helpful. At that level, farmers need to seek government support or resort to another strategy. Recommendations Systems of agricultural insurance are not equally developed throughout Asia. While some countries like India, Japan, the Republic of Korea, the Philippines, and Turkey have completed evolutionary processes and have systems in place which operate more or less efficiently, other countries need to enhance insurance product development, sales intensification, and/or capacity building for national stakeholders. The key factor in the success of agricultural insurance is government commitment, as confirmed by the examples of the Philippines and Turkey. Clear government commitment and motivation also foster motivation among insurers and the insured to participate in agricultural insurance programs. It is a good practice to set up a national database that clarifies the extent of risk potentially affecting agricultural operations and how that affects decisions by stakeholders. When feasible, PPP agricultural insurance systems with responsibilities shared between public and private institutions are recommended. Within PPP systems, governments can provide support in the form of appropriate regulations, insurance premium subsidies, and backup for catastrophic losses. Another good practice is investing in capacity building or education and innovative technologies. Such investments will ultimately improve agricultural productivity, increase farmers’ resilience in adverse circumstances, ensure national food security, and help meet the SDGs. Authors: Shaikh Tanveer Hossain Olena Sosenko Material provided by:Agriculture Division, Asian Productivity Organization (


USA - FCIC crop insurance report for 2016-2019

Federal Crop Insurance Corporation Summary of Business Report for 2016 through 2019. Includes the most current information on countrywide area insured, total premiums, subsidies, indemnities paid, etc. Source -


Robots and the future of agriculture: Australian experience

An element of automation already exists in many areas of agriculture. Precision agriculture, autosteer and controlled traffic farming are technologies enabled by global positioning systems (GPS). GPS is already the norm on many farms. Applied to traditional farming equipment such as tractors, harvesters, ploughs and sprayers, it has enhanced labour efficiency and helped curb costly waste by enabling large-scale crop farmers to harvest and spray fields with pesticide and herbicide with centimetre accuracy. Robots are the next step, using these and other new technologies in combination with remotely-sensed data, to support new levels of decision making and assume some traditional farmer roles. Robots that can plant, fertilise, spray, weed, monitor and, ultimately, harvest, pack and transport crops will inhabit the countryside. While the drones hum overhead other remotely controlled intelligent surface, robots will be able to inspect and herd farm animals[1]. Robotic platforms[2] Earlier this year at a commercial vegetable farm in Cowra, the ACFR (Australian Centre for Field Robotics) unveiled one of its latest agbot creations, the Ladybird, a sophisticated autonomous robot powered by solar energy that is capable of undertaking a variety of monitoring and evaluation tasks. It's also an efficient killer: as it slowly wheels its way around a paddock it can locate and eliminate individual weeds by means of a targeted sprayer. Machine is equipped with sensors for measuring vegetable growth, and for the detection of animal and plant pests. It has a robotic arm that can remove weeds and potentially harvest vegetables. But Ladybird is just one of many robotic platforms under development at the Centre, including a variety of drones and a pair of autonomous rovers christened Mantis and Shrimp.   These vehicles are excellent, particularly for tree crop applications. The robots are equipped with a whole number of different sensors that really span across the electromagnetic spectrum, using lasers to build three-dimensional pictures of the world. ACFR uses these in tree crop applications where the robots can drive themselves up and down the rows of an orchard, and using all of these sensors it can put together a really complete picture of the trees and how they are growing. ACFR can automatically detect and count flowers and fruit, and give maps of that information to growers. That information turns out to be really useful for a decision support capability. Growers can look at the information covering their orchard and they can identify trouble spots and work out how to address those problems so that they can get really the maximum output from their acreage. There are also major environmental benefits to be had from agbot use through a reduction in herbicide usage. Because agbots like Mantis, Shrimp and Ladybird adopt a targeted approach to weed destruction, the overall use of agricultural poisons can be significantly reduced—by up to 40 per cent. And with weeds in Australia developing a chemical resistance, a new emphasis on the use of microwave technology for weed control could potentially replace herbicides altogether. It's not unreasonable to imagine that in the future with technology like this you might actually be able to have mainstream organic produce that is actually farmed at the kind of scale that the current non-organic crops are farmed at. Swarmbot[2] The use of small-scale robotics also opens up the possibility of increasing the overall amount of productive land. SwarmFarm has been developing a small robotic weed-killer called Swarmbot. The robot isn't much to look at - it's a fairly simple metal platform on wheels - but like Ladybird, Shrimp and Mantis, its simplicity belies its sophistication. It's about lightweight machines that can travel very slowly down to a crawling speed, even stop at individual plants and go and intervene and manipulate those plants. In some cases the actual speed of the vehicle, of the robot, may be a lot slower than the speed of the full-sized tractors, but then you make up for that in terms of the fact that it can run overnight and also the fact that you can scale up or scale down these systems based on how many of the individual smaller platforms you have. Aerial robots[3] Another approach to counter the drawbacks of large tractors is to employ small aerial robots equipped with sensors. Although large manned aircraft may be cost prohibitive for routine information gathering, small autonomous platforms have strong potential. ACFR has completed several projects where they developed and demonstrated aerial robotic systems for weed maintenance in an environmental monitoring context, including aquatic weeds such as alligator weed and larger woody weeds such as prickly acacia. Examples of the some of the robotic platforms used are shown in Photos below. In these projects, the idea is to locate sparse concentrations of weeds that exist in large areas, and then to deploy herbicide locally and in a targeted manner. Weeds are automatically identified using classification algorithms that operate on visual imagery collected by the aerial robots. Herbicide can then be delivered manually or via a specially equipped robot. In the broadacre context, this type of approach can complement ground robot systems by rapidly finding concentrations of problem weeds that can then be efficiently targeted by the ground robots on an as-needed basis. Robotic aircraft used in large scale farm enterprises for detecting weeds (top), and an example of a small robotic aircraft for doing the same thing but in small scale applications (bottom). Robotic milking systems[5] Automated or robotic milking systems address the twin challenges faced by dairy farmers of labour intensity and labour shortages. Automation reduces the need for people to be present during milking, providing additional time and flexibility to focus on other areas of farm management. Robotic milking systems use sensors and a camera or laser-guided milking cups to guide a robotic arm to the udder, clean the teats and attach milking cups. When milking is complete the cups are removed automatically. Additionally, each cow may be fitted with a transponder, which registers the animal as it enters the dairy and collects data enabling milk production, milk quality and herd health to be monitored. In Europe, manufacturers of automatic milking systems predict that by 2025 almost half of the herds in leading dairy countries, such as Denmark and the Netherlands, will be milked by robots. Robotic dairies, with varying levels of automation, have been available commercially in Australia since 2001. However, Dairy Australia believes adoption has been slow due to a lack of long-term performance information about robotic dairies in Australian pasture-based systems. While the cost of installing a robotic dairy is similar to installing a conventional dairy, the outlay remains significant and likely not warranted if an existing dairy is still functional and suited to the scale of the farming operation. Agbot II[4] The Queensland University of Technology (QUT) has designed and built a robot that could save Australia’s farm sector $1.3 billion a year by slashing the costs of weeding crops by as much as 90%. This fully-autonomous agricultural robot, developed with support from the Queensland Government, is called Agbot II. Agbot is equipped with sensors, software and other electronics that allow it to detect and classify weeds and then kill them either mechanically or chemically. In future versions, the robots could also feed back data on such things as soil and crop health and the state of diseases as they conduct their operations. This would enable better management decisions driven by paddock specific real-time information. To date, Agbot II is concentrated on the three weeds that are relevant to Queensland: volunteer cotton, sow thistle and wild oats, and the vision system operated with 99% accuracy in the classification of the correct species based on the images collected by the robot cameras. The light weight of AgBot II, which is about 600kg, will help reduce soil compaction that affects the yield by limiting the root development of the crops. Also due to weight, the robots can be deployed faster onto fields after rain to keep a tight control of weeds before they drop their seeds. AgBots are also designed to work in groups, which increases the reliability of weeding operations. If one robot has a problem and fails, the others continue operating. Another important characteristic of the Agbot ll is that it is solar powered, which makes it eco-friendly and easier on the farmer’s budget. Challenges for adoption[5] The main challenge to the adoption of robots in Australian agriculture is the fact that the technology is not sufficiently advanced for widespread uptake. In 2016, most agricultural robots for operation on individual farms are still in the trial or proof of concept stage. The Queensland University of Technology identified four general barriers to widespread adoption of robots in agriculture in 2014. Technology — Most agricultural robots are working in trial situations where they have continual access to technicians and engineering support. The challenge is to build a robot for commercial operations that is reliable and robust, simple enough to operate and low cost. A lack of coordinated data and standards may also prevent on-farm adoption, and there is a need for robots to be able to operate across multiple hardware and software platforms. Regulation and certification — Protocols for the operation of autonomous robots may need to be developed, particularly in relation to safety on farms. Preliminary regulations for the operation of UAVs have been developed, however ground-based robots have not been included. Including on-farm robotic functions in such regulations may also affect insurance cover and premiums. Business — As at 2016, there is not enough commercial performance data to identify the value or expected return on investment of robotics to Australian farm businesses. Further, agriculture consists of many small businesses with limited access to capital for business development, which may delay the uptake of robotics in the industry. This is in contrast to large mining or stevedoring businesses with financial capacity to invest in research and capital upgrades. The challenge for agricultural engineers is to develop low-cost technology without sacrificing quality or reliability. Legal and socio-economical aspects — Liability for the actions of robots may need to be determined, particularly if robots acting autonomously cause damage to people, property, crops or the environment. The social acceptability of robots in the landscape may also need to be considered. Challenges for the adoption of robots, partially addressed in the list above but likely to be significant, include the robustness of the technology for agricultural applications and the aging target user group. Source - Based on materials: [1] [2] [3] [4] [5] Rural Industries Research & Development Corporation publication no. 16/033, Robots, 2016


The Evolution of Risk Management in Aquaculture: The Case of Insurance

Sunderland Marine Mutual Insurance Company Ltd (SMMI) has been insuring aquaculture operations since 1986.  To assist the underwriting team and to provide risk management assistance to its Members, the in-house technical service of Aquaculture Risk Management (ARM) was also established at the same time.  The core thinking behind this development was to actively risk manage aquaculture operations by conducting site visits, for the benefit of both the Insured and Insurers.  A survey of the production facility is crucial in order that we can understand the operation and therefore be in a position to offer pertinent advice. The Surveyors who are based in the UK, Ireland, Canada, Chile and Australia undertake regular visits to every insured.  Since the underwriting of aquaculture risks commenced, ARM have clocked up over 6,000 site surveys, the majority of which have been to producers of Atlantic salmon. In the early days of SMMI’s involvement in aquaculture, Surveyors were assisting in the development of a burgeoning industry and providing help with site specific problems.  The industry in Scotland and Ireland was typified by a large number of small owner/operators and ARM would provide assistance with cage and mooring issues for example, and sometimes even lend a hand to mitigate and clear-up mortality events when farmers were short-staffed.  The site specific problem is relatively simple to detect and apply appropriate measures to ameliorate or prevent a recurrence. With the globalisation of the salmon industry, now run by a comparative handful of operators, coupled with the development of the technology and infrastructure used, the Risk Manager’s role has altered to take into consideration issues on a regional, national and sometimes international scale.  This change from being very hands-on to a more research or investigative approach over the past 10 years or so has meant that ARM have had to augment its risk management discussions from individual farm managers or owner/operators, to now include the production and technical divisions of farming companies, or even Head Offices. Not only is it important to investigate significant stock losses, but also to look at the near-misses.  Information from these events can provide valuable clues to potentially avoid an expensive mortality in the future.  All the information from surveys, claims and losses is analysed and mapped.  From this data our experience shows that events are now just as likely to affect regions as individual farms.  With this in mind, ARM has instigated Event Risk Management to bring together risk managers, aquaculture companies, brokers and experts such as veterinarians, epidemiologists, academics or engineers to discuss these potentially large events, which can cause significant mortality over a wide geographic area. Examples of risk management assistance provided to Policyholders in recent years include: - Investigations into feed constitution after suspicions that variable feed quality was causing developmental problems - Analysis of containment net integrity - Promotion of Integrated Pest Management Strategies - The exchange and dissemination of information.  The Identification of “centres of excellence” to provide assistance or training for our Insureds on specific problems - Development of bloom monitoring and mitigation techniques - Provision of assistance to Policyholders where civil engineering projects have altered, or have the potential to alter water quality parameters - Provision of emergency assistance to Insureds experiencing acute problems in hatcheries - Technical input into a project to assess a novel platform for the production of seaweeds The higher prices obtained for salmon in recent years have resulted in significant investment in infrastructure, enabling the farming companies to supply similar cages, nets and moorings, to all farming regions.  This standardisation has the advantage for companies and Risk Mangers that lessons learnt in one part of the world can be applied to other areas and this sharing of knowledge and experience has been an important factor for the industry’s development in “new” locations; it is very uneconomic to re-invent the wheel. The task of the aquaculture risk manager has evolved over recent years from being almost a supplemental farm manager for an individual site, to a global researcher.  This reflects the maturing of the Atlantic salmon farming industry into a highly sophisticated, efficient and scientifically-minded operation.  The development of Atlantic salmon farming has not been alone during this time. Lessons learned, information gathered and contacts made from the establishment of ARM in 1986 have been used to risk manage farms producing sea bass and sea bream, tuna, trout and abalone to name but a few.  The core themes of the risk management procedures developed from the early years of ARM, of communication, observation and assessment have been crucial to provide effective risk management which has helped to deliver solutions to problems encountered for other farmed species around the world. Source - FARMD


Risk Management in Aquaculture: Case Study of Haiti

Experts have always considered the vast oceans as our salvation with respect to food problems and increasing world population, merely because of their immensity. However, open seas (about 90%) are biological deserts. The main active areas (the remaining 10%) are: (1) the estuaries that act as traps for nutrients entering from freshwater flow, (2) upwelling areas where deep, cold water rich in nutrients is brought to the top and (3) waters overlying the continental shelves. Ac- cording to J. Matthew Roney (Earth Policy Institute , 2012), the United Nations Food and Agri- culture Organization (FAO) projects that harvested fishery products from all ocean waters will fall below 90 million tons in 2012, 4 percent below the all-time peak haul of nearly 94 million tons in 1996. Wild fish catch per person has dropped from 17 kilograms in 1998 to 13 kilo- grams in 2012, the lowest in 37 years. This follows an earlier report by FAO  stating that 80 percent of fish stocks are either fully exploited, overploited, or have collapsed. Though a catch reduction of 20 to 50 percent is needed to make global fisheries sustainable, the demand for fish is expected to increase by 35 million tons by 2030 due to increased consumption and a “rapidly increasing human population.” Aquaculture (the husbandry of aquatic food organisms) has been seen as the solution.  Global production of fish, crustaceans, mollusks and other aquatic animals has seen a steady increase for the past forty years reaching 148.5 million tons in 2010.  The industry has shown a strong growth of 6.3% since 2001 from 34.6 million tons to 59.9 million tons in 2010, netting nearly USD120 billion for that year.  However, with success comes tremendous risks and managing these risks is critical for continuing success.  Risks in aquaculture, as it is the case for agriculture in general, include disease, poor product quality, competition, equipment failure, and, of course, natural disasters.  The fundamental question that we all ask ourselves is How do we manage risk?  The USDA Risk Management Agency (RMA) defines risk as “the chanceof something bad happening” and chance implies a degree of uncertainty.  That uncertainty has been a key factor in limiting investments in aquaculture in underdeveloped countries in Africa and other parts of the world. How do you manage risk? Case study of Haiti Risk management is about reducing the cost of risk.  In relative term, it is about “losing less money as compared to losing more money”.  Since the cost of money is higher in developing countries because of high interest and inflation rates, understanding risk management becomes paramount for successful aquaculture operations.  To understand risk, one needs to understand three important concepts: 1) Awareness of the risks; 2) Understanding of the benefit of a sound risk management plan, and 3) understanding of the likelihood and severity of possible loss due to risk. Haiti, also known as the Republic of Haiti, is a Caribbean country. It occupies the western, smaller portion of the island of Hispaniola, in the Greater Antillean archipelago, which it shares with the Dominican Republic.  Haiti, with a population of over 10.4 million people, is the poorest country in the western hemisphere. Aquaculture is not well developed because of the lack of private investments in the sector.  Most aquaculture programs are run by missionary groups and non-government organizations.  For the past five years, the Haitian government and a portion of the International community have multiplied their efforts to attract private investments in the aquaculture sector which, surprisingly enough, offers excellent opportunities.  Understanding and managing risks can foster further development in the sector, generate thousands of jobs and create economic opportunities for millions. Awareness of the risks:  A person investing in aquaculture in Haiti should be aware of the uncontrollable force of mother nature.  Hurricanes and tropical storms go through the country each year from June to November and cause substantial damages.  The prime risks are flooding and physical damages to production facilities.  Flooding can also introduce pathogens and cause great changes in water quality.  In 2008, after the passage of tropical storms Fay, Gustave, Hannah and Hurricane Ike, over 70% of production facilities were destroyed.  Viral and bacterial diseases were observed in ponds right after the passage of these storms.  Aside from production risks, producers also face marketing risk, often associated to species and are system specific. Marketing risks include product pricing, access to market due to difficult road conditions, competition not only against seafood imports but also against other commodities such as poultry, beef and pork.  Finally, everlasting land tenure issues can also hinder aquaculture development in the country.  Production and marketing risks can result in substantial financial losses. Understanding the benefit of a risk management plan:  Large corporations have long understood the benefit of sound risk management plans.  However, in small countries like Haiti where most operators in the aquaculture sector are small, often uneducated, farmers, understanding risk management and elaborating risk management plans are completely alien concepts.  Investments in aquaculture are often on the basis of poorly designed “projects”.  Preliminary studies are not usually done to assess the risks and risk management plans are simply ignored. Understanding the likelihood and the severity of potential losses: That concept becomes important since financial resources are limited.  Most producers never recover from losses because they simply do not have the money to start all over again.  Access to loans, especially in the agricultural sector, is almost non-existent. The solutions:  A number of options exist to manage risks and many solutions are available, even in small countries like Haiti.  The first one is theinsurance option.  Typically, crop insurance programs are intended to transfer risk from one party to another, generally away from the producer and to the insurance underwriter.  One of the immediate benefits is that insurance companies can afford to commission and elaborate risk management plans, thus responding to the second concept in risk management.  Aquaculture commodity insurance is non-existent in Haiti and even in the United States has not yet become commonplace. The sector, in general, has made it difficult, if not impossible, to develop an affordable insurance product that is appropriate for all species or production methods.  In Haiti, the government is working with institutions such as the Inter-American Development Bank (IADB) and the USG Overseas Private Investment Corporation (OPIC) on programs to provide crop insurance in the agriculture sector in Haiti.  Those institutions can underwrite the premium required by banks or insurance companies.  Whether or not aquaculture will be included remains to be seen.  The second option is to shift the focus from small farmers to corporate ones. Corporate investors are required to compile risk management plans in order to protect their investment and they can afford to pay the hefty insurance premium.  Third, non-insurance optionsmay provide farmers with viable alternatives.  Management of production risks such as disease, poor water quality, environmental degradation and power outages can be accomplished by a number of methods: 1) better training, design and supervision; 2) changing husbandry practices; 3) building redundancy in production systems; 4) improving feeding practices; and finally 5) employing stringent bio-security measures. Source - FARMD


Risk Management for Smallholders in Aquaculture: The Work of Aquaculture without Frontiers

Aquaculture without Frontiers (AwF) is an independent non-profit organization that promotes and supports responsible and sustainable aquaculture to alleviate poverty and hunger. We do this by teaching aquaculture techniques to the rural poor in developing countries, thereby  improving their livelihoods. By teaching the poor  to farm fish, we are training them in all aquaculture techniques, thereby assisting them to manage various risks that may arise (i.e., over-stocking, poor technical pond construction, inadequate equipment, incorrect species utilization, diseases, climate change and other natural impacts, husbandry methods, lack of adequate logistics, market fluctuations, etc.). One of the most useful resources we have found in our work has been the  use of ‘Farmer to Farmer’ training programs. These activities have proven to be a sound model for us which, with the great assistance of sponsors, enables us to send experienced, skilled and knowledgeable aquaculture farmers from developed countries to engage with the people we are trying to assist in developing countries. This is a double win because as well as passing on their invaluable skills, there is an enormous sense of well-being for the training ‘Farmer’ knowing that he/she has been of assistance to someone who will be able to use the skills gained well into the future – the work can make an enormous difference. Case Study: Bangladesh The word ‘Monga’ refers to the twice yearly cyclical phenomenon of poverty and hunger that occurs in Bangladesh. Monga happens from September-November (after the main crops are planted) and from March-April. During these times there are fewer available job opportunities for rural workers, resulting in the workers being forced to become migrants and move to more urban areas. Those who cannot migrate can face malnutrition and starvation, as has been cited in Bangladesh’s Poverty Reduction Strategy Paper, and has been the subject of NGO aid programs. Our project covered a total of 111 participants over a 4 year period – all from farms considered marginal at the time. The third year started with 89 farmers in the system, all of whom continued into the fourth year, and they were joined by 22 new farmers for the last year. The main aim was to increase production and provide a sustainable training model. The training is essentially a risk management process as all of the issues it addressed are strategies for various deficiencies that create reduced production and inefficiencies. The new farmers were oriented on fish culture through pond on-site  training.  Farmers are trained on pond preparation, liming, fertilization, feeding, fingerling conditioning, sampling etc. Older farmers also get refreshers by training at the pond site, so that they can also learn about best practice in fish culture. The local Fishery Officers from the Government of Bangladesh also extended support during pond site training and refresher courses. Their participation helped create shared experiences which can be beneficial for future capacity building. It was discovered during the project that traditional stocking practice allowed for an excess number of fingerlings without maintaining a species combination. The fingerling trader often persuades the pond farmers to over indulge in huge stocking – this is good for the trader as he pockets the extra money for the extra fingerlings sold but can be a disaster for the pond and fish, as getting the stocking density wrong can be a critical factor in the whole production process that can have devastating effects. The project specifically managed the risks of improper pond preparation, improper feeding and fertilization, misunderstanding about sampling in order to adjust production strategies, lack of knowledge regarding annual production cycles, over-stocking and lack of species diversity in ponds. This knowledge is critical for farmers to build sustainability and ensure food security going forward. The funds that were distributed to the project participants were used for purchasing fingerlings, lime, feed and fertilizer. The volunteer farmers assisted the project participants by ensuring that they were educated on maintaining quality of the inputs. In addition to farmers, four fingerling producers were developed through the project and they were assisted and advised to rear over-wintering fingerlings. It is notable that in the finalyear of the project production had increased  to approximately 6100 kg of fingerlings which were sold to the local grow-out and project farmers. The pond farmers themselves were taught to stock large size over-wintering fingerlings as it promotes good growth. This business develops the farmers into good aquaculture entrepreneurs   that then scale up the project and add value by sharing their newly acquired knowledge  with othersand by working as local extension operators. Project Impact The farmers that engaged in aquaculture were able to cope with Monga by selling fish during those times. Fish culture helped as a source of income when no other alternative source was available. The household fish consumption especially for the children comes from their own pond where saved money enabled them to purchase items from the market. About 82% of farmers from the area were involved with pond cultivation and they continued to produce a range of local vegetables, most of which were used for family consumption with the balance sold in the market to earn money. An added bonus is that fish intake by the families involved with this project significantly increased. The rural poor farming family normally cannot afford to eat fish regularly every week. During the project it was shown that the average fish consumption during the reporting period by those families involved rose to 33.4 kg (current world average is about 18kgs). Their neighbors had also increased their purchasing of fish during harvesting time due to the improved availability. Women and children were encouraged to participate in fish culture activities and this improved the family’s engagement. Conclusion The conclusion of the project highlighted that aquaculture can play a vital role in the  life of the rural poor through utilization of small ponds, which are  sources of income and food for marginal farming families. The families engaged directly in the project obtained a major source of nutrition from consuming the fish, an effect which expanded to positively impact their neighbours as well. This all created confidence towards aquaculture and by developing the risk mitigation strategies and capacity building through strong linkages the project, also created a sustainable approach for aquaculture. Source - FARMD


The contribution of remote sensing tools to risk management in aquaculture

Aquaculture is a high risk production sector. The industry’s growth has resulted in a concentration of production in key areas, with large loss events a feature of the sector. Insurance, where offered, tends to be expensive and the risk carried by the farmer is significant. New tools available to the farmer and risk professional enable better risk management and facilitate better management practices, codes of conduct, traceability and standard operational procedures. Being able to identify, monitor, and define risk enables the farmer to better control risks facing his operation and can result in reduced insurance premiums and wider coverage. This paper presents a short overview of the state of the aquaculture insurance industry and the use of innovative remote sensing tools for monitoring specific risks related to Harmful Algal Blooms. Introduction Fish farming as a sector is growing massively on a global basis. Aquaculture has an estimated global production value of ?75 billion -with salmon farming having grown 10% year on year for the last 20 years. Wild fish catches have been static for the last 25 years, and the growing shortfall in fish supply must be met by aquaculture. Despite the size of the industry in monetary terms, insurance as a risk management tool has made limited inroads in aquaculture. Industry sources estimate that less than 3% of all aquaculture operations are insured globally. Insurance coverage is primarily focused on large scale professionally managed farms, with typical premiums between 3% and 5% of the insured sums, indicative of insurers’ perception of the risk within this industry. Turquoise swirls in the cool Barents Sea north of Norway are caused by a bloom of phytoplankton The global reinsurance company Swiss Re recently presented an overview of the major causes of global insurance claims in aquaculture. These are listed in descending order: diseases, storms, algae and jellyfish bloom, equipment failure and ‘super chill’(extremely low winter temperatures leading to freezing of coastal waters). Here we focus on one particular risk, hazardous algal blooms, which severely impact aquaculture. During a bloom, the oxygen content of the surface water is reduced, toxins can be released and direct contact of algae with fish gills lead to high fish mortality or significantly reduced growth. Scientists generally agree that there are three main reasons for the observed increase of algal blooms: 1. global warming (favoring growth of algae)2. increasing run-off of nutrients like phosphates and nitrates into surface water3. introduction of invasive species by ballast water of ships. If a bloom is detected fast enough, farms have a number of measures they can take to mitigate the impact of a bloom including: - stop feeding (encouraging the fish to stay deeper in the water column) - deploying “plastic skirts” or tarpaulins around the cage as a barrier - using compressed oxygen pumps in the cages  and/or pumping up unaffected water from deep under the cage site In a number of major aquaculture producing countries, such as Canada, Scotland, Ireland, Chile, Australia and South Africa the risk of algal blooms near fish farms is significant. Recorded incidents of algal bloom have resulted in losses of tens of millions of dollars to fish farmers and insurers. Example cases of algal bloom damages include an estimated loss to the Southern Chile salmon industry of over US$ 25 million in 2009, a red tide affecting abalone production in Fujian, China with damages estimated at over US$ 35 million in 2012 and a recent 2013 outbreak in Tasmania, Australia with losses for the shellfish industry estimated already at over US$ 20 million. The role of remote sensing in aquaculture for risk assessment and control BlueLeg Monitor and Water Insight of The Netherlands have developed a series of satellite and handheld remote sensing products and services for aquaculture. These enable farmers and insurers to assess the algal bloom risk within an area based on historical data stretching back over 10 years. The historical records enable a baseline analysis to give a good impression of the progressing environmental impact of aquaculture operations.  Additionally, insurers and loss adjusters may also benefit from this and other remote sensing services in evaluating damages. The BlueLeg Monitor system is based on the combined use of optical data from satellites and mobile monitoring instruments giving real time, on the spot data collection. These in situ instruments have been developed both for hand held applications and fixed position use. Satellites monitor large areas (typically in a range of hundreds of kilometers) once per day. Hand held/mounted (WISP) units monitor and assess local water quality at any time during daytime. The data of both systems are interpreted by the same methods and combined to provide very reliable measurements. Current and historical optical measurements can be converted, using state-of-the-art proprietary algorithms, into relevant water quality indicators such as chlorophyll-a, phycocyanine (blue algae pigment), CDOM (colored dissolved organic matter), water transparency (Secchi disk depth) and total suspended matter. WISP monitors are currently being used all over the world, from the Dutch Ministry of Waterways responsible for water infrastructure and water quality and the Amsterdam Water Authority Waternet , through to national environmental institutes such as  the Australian CSIRO and the Finnish Syke, among others. Outlook The growth in aquaculture, with the support from industry participants including insurers, is set to continue, and with it the requirement to grow sustainably. By identifying, monitoring and managing risks, the ability to grow sustainably increases, thereby benefitting all supply chain actors within the industry with support expected to increase as the ability to asses risk improves. Wider applications of remote sensing technology are already assisting other industries to monitor key risks, with terrestrial farming, heavy industry and environmental stakeholders using satellite imaging on a daily basis. Remote sensing of algal blooms  and the monitoring of these events on aquaculture operations globally is an important tool improving risk assessment and management in aquaculture. Source - FARMD


Risk in Aquaculture: The Rise & Demise of a South African Commercial Shrimp Farm

Introduction Amatikulu Prawns (Pty) Ltd operated as a commercial shrimp farm between 1989 to 2004 when market forces made producing shrimp unviable and the farm closed. The farm established the technical requirements from the existing scientific literature, consultancy, training courses and visits to other commercial farms. The farm had two sites (10 Ha and 24 Ha), two hatcheries, a HACCP certified processing plant and a feed mill. The Site The Amatikulu Prawn Research Unit was associated with “prawn” culture research and development (In South Africa, the term “prawn” is used for shrimp). During the 1970's work was funded by the Fisheries Development Corporation of South Africa (abolished, 1987), mainly onFenneropenaeus indicus(Colvin, 1975; Read, 1977; Gerhardt, 1978; Emmerson, 1980a; Emmerson, 1980b; Emmerson, & Andrews, 1981; Emmerson, 1983, 1984; Emmerson, Hayes, & Ngonyame, 1983, Hecht and Britz, 1990) and the Giant Freshwater prawn  Macrobrachium sp.  Macrobrachium rosenbergii was imported in 1981 from an aquaculture operation in Mauritius (S. Myburgh, Amatikulu Prawns, pers. Comm.). Amatikulu Prawns (Pty) Ltd was established in 1981, originally with the intent of farming with M. rosenbergii. This initial effort to commercialize the research on freshwater prawn culture was not successful and the company started the commercial production of freshwater ornamental fish. Setting up... Interest in commercial shrimp farming by the owner, Stephanus Myburgh, led to the basic requirements of shrimp culture being established in 1989. Algal culture and larval rearing trials were undertaken with Penaeus monodon and Fenneropenaeus indicus. In March 1991 the construction of ponds began for a pilot 6 hectare intensive farm; funded by a loan from the Industrial Development Corporation (IDC). By the summer of 1991 the first ponds were stocked with Penaeus monodon. Before starting with the venture a full review of the literature was undertaken. In particular, site requirements (Chiu, 1988), engineering (Bose et al, 1991), maturation and spawning, hatchery and algal production, nursery and grow-out and nutrition and feed manufacture were investigated. During the history of the farm, the author travelled widely in order to increase knowledge and background – this included  visits to Texas  A&M, USA (Shrimp Farming Short Course), Bigelow Labs (algal culture), Taiwan (Tungkang Marine Laboratory and commercial feed (President Feeds, Hanaqua feeds (R. Young, P. Chiang) and hatchery and growout equipment suppliers, (Team Aqua, Nan Rong, Taiaqua Co.  LTD.), Thailand (hatchery (Phuket, Suwannasarn Enterprise (Dawn Suwannasarn)) and growout farms (Nakorn region, Bangkok Aquaculture Farm Co., Ltd (Michael Chen, Han Li-Yu))), Ecuador (hatcheries) (with a consultant Ken Chien) and Hawaii (Oceanic Institute, feed consultancy).  A further 4 ha of grow-out facility was added in 1997. The switch to F. indicus was a commercial necessity due to a deterioration in quality and lowered availability (Envirofish, 2009) of the  wild P. monodon broodstock that were originally used from the offshore  source on Tugela Bank.  F. indicus on the other hand were plentiful, comprising 80% of the catch and spawned easily. Management moves and world shrimp markets Amatikulu Prawns (Lat: 29° 4'36.04"S; Long: 31°38'46.32"E) took ownership of the neighboring Mtunzini Prawns (Lat: 28°56'58.02"S; Long: 31°46'9.11"E) from the IDC in October 1997. At this time, Amatikulu Prawns comprised of 10 hectares of ponds and Mtunzini with 53 ponds (24 Ha).  Mtunzini had been in operation since 1993 and had its own hatchery that was kept in operation, while the processing and feed production was done on the Amatikulu site. The Amatikulu site had a higher salinity profile (generally over 15 ppt) compared to Mtunzini (generally below 15 ppt). With a dramatic decline in shrimp prices in world markets after 2000, and the fact that the production site was unable (due to seasonal temperature fluctuations) to produce two full crops in 12 months (as were its Asian competitors), expansion to increase scale of production was identified as the only remedy to reduce production costs. Over the following 18 months various investment options were explored, but no further investment or funding was secured, causing the management to close the farm after the June 2004 harvest, as entering the next season would have led to bankruptcy. Aerial view of the Amatikulu Prawns site, 1998 Aerial view of the Mtunzini Prawns site, 2001 Conclusions In the end this farm and aquaculture enterprise failed as a commercially viable concern due to a number of factors, the most pertinent being  fluctuations in global shrimp prices and a production model unable to compete with or adapt and adjust to declining international prices.  Site location, climate and temperature considerations all  reduced frequency of  potential production cycles which led to competitive disadvantages compared to Asian and south American producers, which were further exacerbated by  higher local labour costs. The international price decline in shrimp prices followed the introduction of L. vannamei into China and other countries and is best reflected by the 2013 resurgence to the prices of 1990 that is a result of the emergence of  EMS shrimp disease in these same producing countries. Current market prices have increased following the spread of EMS disease in major producer countries. Source - FARMD


Aquaculture and Risk: a development perspective

Where does risk lie in aquaculture? Despite its long history, the farming of aquatic foods has only been practiced at scale in recent decades and as a young, albeit now important, food sector there remains much to learn.  By comparison with livestock and crops, we have a poor understanding of the biology of aquatic organisms and the kinds of environment that must be provided in order for farmed aquatic animals to thrive. Our knowledge of fish and shellfish nutrition and immunology is growing, but remains inadequate to always ensure animals are sufficiently well-fed to resist disease. Through a poor understanding of climate variability and the power of winds and waves, pond and cage production systems are sometimes not fit for purpose or are located in places where they are susceptible to damage and loss of stock. The reliance on ecosystem services to provide dissolved oxygen and disperse and assimilate wastes often results in a high degree of connectivity with upstream risks, such as pollution or harmful algal blooms. Beyond just production related risks, the entire aquatic food market system faces multiple barriers to development in those regions of the world where it is most needed. As a result of the perishability of farmed aquatic animals and the volume and nature of transactions, often carried out in an environment where management, financial resources, distribution and access to markets are scarce or difficult, an entirely different set of risks arise that need to be managed. WorldFish and aquaculture The mission of WorldFish is to reduce poverty and hunger through improving fisheries and aquaculture. In developing and promoting the uptake of fish and shellfish farming, our concerns are to identify and manage risks for the poor and vulnerable throughout aquaculture market systems and those who depend on farmed aquatic produce as part of their diet. Two examples serve to highlight this. De-risking to encourage private sector investment and reduce environmental impacts WorldFish has been exploring the business case for attracting more private investment in smallholder aquaculture. Research in Bangladesh, Indonesia and India has shown that investing in smallholder farmers and their organizations can be commercially viable, creating economic, social and environmental benefits. However, it is not without risk. To minimize investment risks we increasingly know where to target investments and what the sequencing of that investment should be. Improving access to technical services, and thus to productive technologies that minimize environmental impacts, is essential. Strengthening farmer groups or producer organizations can facilitate access of smallholders to other essential inputs, such as affordable feed, quality seed and affordable credit. Investment in developing the capability and capacity of fledgling enterprises, and most importantly their business skills, is also critical. The enterprises must also be linked to business services such as microfinance, technical and market development and the collaborative purchasing of inputs. Engagement of all actors along the value chain has the potential to deliver higher, more equitable rewards.  Capacity and network building among smallholders and intermediary organizations may take several years but is key in establishing new, robust, businesses in the aquaculture sector. The approach is beginning to attract the interest of the impact investment community. Managing risk among poor and vulnerable aquaculturists in cyclone-prone southwest Bangladesh Coastal Bangladesh faces significant risks from climate change, including increased frequency of extreme weather events and salinity intrusion caused by sea level rise and hydrological changes, impacting on both agriculture and aquaculture in low lying areas. Aquaculture has been widely adopted across the southwestern coastal region, where it provides food and income for coastal dwellers; yet coastal fish and shrimp ponds face their own risks, including loss of crops and damage due to flooding and disease. WorldFish research recently explored the influence of a major climate event, Cyclone Sidr, which hit coastal Bangladesh in November 2007. Research showed that fish and shrimp ponds were vulnerable to damage, yet ponds were commonly repaired as a priority by households, and provided cyclone affected homes with an important means of coping through provision of food and income in the weeks following the disaster. Research also identified various ways in which farmers can further manage risks to aquaculture from cyclones and flooding events. Such interventions include raised pond dykes to reduce the influence of flooding, modified seasonal stocking patterns, improved hatchery and pond management to reduce disease rates and changes to fish harvesting practices to avoid periods of high flooding risk. Changing species or stocking larger fish fingerlings can also shorten the crop duration while fish nurseries provide significant short-term income opportunities and reduce risks compared to longer duration crops. Conclusion Aquaculture is needed to meet future demand for fish and other seafood, but sustainable growth requires we better understand and manage risks.  Risks are aplenty in aquaculture, some of which we are only now beginning to understand and address. The most important, from a development perspective, are those that make the lives of vulnerable smallholders worse rather than better. Our approach is to work with stakeholders throughout the market system and with partners to identify these, and to co-develop and implement interventions to de-risk transactions, capturing what works and what doesn’t and sharing our learning, thereby helping attract the levels of investment needed to secure sustainable growth in this increasingly important food sector. Source - FARMD


Risk Management for Aquaculture through GLOBALG.A.P. Certification

Introduction Aquaculture activities are increasing during the last decades. There are several challenges on the way but also great opportunities to generate protein for human consumption from aquatic farming activities to keep the needed supply for the world population. Farming production systems are more and more with evident pressure in attaining a sustainable process to generate expected food volumes with responsible practices. This is one of the greatest challenges and risks must be part of the planning and operating procedures. The following article focuses on risk management for aquaculture through GLOBALG.A.P. certification. About GLOBALG.A.P. GLOBALG.A.P. Certification system is a not-for-profit standards setting organization with a crucial objective: safe and responsible agricultural production worldwide. Standards are implemented voluntary. GLOBALG.A.P. also acts as a harmonization platform for national and private schemes. Three main scopes covered are: Crops, Livestock and Aquaculture. The GLOBALG.A.P. Aquaculture Standard applies to a diversity of fish, crustaceans and molluscs and extends to all farmed species, whereby the juveniles are either being derived from hatcheries or collected passively in the planktonic phase (e.g. shellfish farming). The standard covers the entire production chain, from broodstock, seedlings and feed suppliers to farming, harvesting, processing and post-harvest handling operations. It serves as a practical manual for any aquaculture producer, ensuring food safety, minimal environmental impact and compliance with animal welfare and worker health and safety requirements. Figure 1: GLOBALG.A.P. Aquaculture certification coverage of the entire production chain: Risk management – farming activities For all farms, a risk assessment to show that the site in question is suitable for production with regards to Food Safety, Environment and Animal Health shall be in place and reviewed annually. Consequently, a management plan can be developed, establishing strategies to minimize the risks identified. Different from industrial activities that can take place under controlled situations, any farming activity due to its nature, possess a higher risk. Detailed risk assessments on specific components are included into the set of standards for GLOBALG.A.P. Aquaculture.  Further Risk Assessments – RA shall be in place for the specific components: - RA on Hazards to Worker Health and Safety:  generating health and safety management procedures as well as identifying the need of certificates of competence for workers handling and/or administering veterinary medicines, chemicals, disinfectants or other hazardous substances as well as workers operating dangerous or complex equipment, including diving operations. - RA on Hygiene: generating the appropriate hygiene instructions for all workers, who shall be trained. - RA on Food Defense:  to address potential threats to food security in all phases of the operation. Information of all employees and subcontractors must be available, including procedures for corrective actions in case of intentional threat. - RA on Chemical Storage:  risk on cross contamination to guide on the appropriate storage and conditions. - RA of Spillage: of non-used chemicals to guide on the appropriate storage infrastructure. - RA on Transport of Chemicals:  that considers food safety, health & safety and environmental risks. - RA on Hazards: risk analysis as base for the farm´s Hygiene Standard which must be adopted by all workers and visitors with all subjects listed in the GLOBALG.A.P. Aquaculture standard included. - RA on Medicinal Residues:  in relation to food safety with respective action plan when the Maximum Residual Level – MRL in the country of production and/or destination has been exceeded, included in the Veterinary Health Plan – VHP that shall be signed of by an authorized veterinarian. It is in the VHP that the need and frequency of fish flesh residue analyses shall be carried out to verify compliance with MRLs for approved medicines and to verify no residues for non-approved substances. - RA on Common Diseases: of the species/location to establish minimum parameters to show “good health status” before moving stocks to grow-on areas. - RA on Animal Health & Welfare:     - including farm, predatory and extraneous species present in the farm unit;     - routine water quality-monitoring program, including relevant water quality parameters and sampling points;     - parameters including temperature, dissolved oxygen, carbon dioxide, dissolved nitrogen (saturation), pH, ammonia, nitrate, nitrite, suspended solids;     - design of all equipment and systems to avoid any risk of unnecessary stress or damage to the fish. - RA on Water Quality: showing there is no risk to compromise food safety and animal health & welfare. From the environmental point of view, independency of the intake and discharge of water shall be the case to avoid unwanted contamination. - RA on Pathogen and Disease Spread: to own stock and wild fish species that shall consider a system in place for dead fish removal, storage and disposal as well as documented procedures for cleaning/disinfecting of all equipment and infrastructure in contact directly or indirectly with the fish and/or appropriate fallowing periods between harvests and re-stocking. - RA on Escapes: that shall include design of all equipment and systems, proper operating procedures to inspect integrity of nets and strength, appropriate net mesh to prevent escapes and risk of injuries to the fish. - RA on Transport Systems and Associated Equipment: that includes appropriate cleanliness and disinfection as well as avoidance of any type of escape. - RA on Pest Infestation: for all operations. - Environmental Risk Assessment – ERA: with detailed information of the minimum criteria to be considered (special cases for countries lacking legal requirements with this respect). - Biodiversity: Risk Assessment. Risk management – hatchery activities Together with the above mentioned, risks for farming activities that are also compulsory for hatcheries, there shall be in place extra risk assessments for: - Water disinfection: need of incoming water disinfection; - Food safety: when raw unpasteurized or live feed used at hatcheries to assess if this will not affect food safety and that does not pose a risk to the farmed stock - evidence of routine surveillance disease monitoring for pathogens. Risk management – compound feed manufacturing Farms must show that 12 months after certification, all feed used at the farm has been checked. GLOBALG.A.P. Compound Feed Manufacturing standard requests the following risk assessments: - RA on Safety and Health : working conditions as base for the Health, Safety and Hygiene Policy and Procedures. This will define the need of training for workers on identified areas. - HACCP principles: e.g. Codex Alimentarius Commission Code of Practice – General Principles of Food Hygiene. - RA for All Suppliers: must be present with a documentation that demonstrates that all suppliers are risk assessed according to recognized food safety standards. - RA for Each Feed Ingredient: must be subject to a formal HACCP based risk assessment, selection and approval process based upon Origin, Storage, Processing, Handling, Transport and Nutritional and Bacteriological Characteristics. - RA on Mixing efficacy: of all mixers must be tested and incorporated into a documented risk assessment. - RA for External Transporters of Finished Feed: shall be evaluated based on risk. At farm level, a risk of contamination when medicated feeds are used shall be base for proper storage of feed with/without medication. Risk management – post harvest activities At post harvest activities, the risk of mixing GLOBALG.A.P. certified with non-certified product is covered through criteria that includes proper identification of incoming products, identification and confirmation individually of their certified status through the GLOBALG.A.P. Number – GGN. Mass balance calculations enter into the evaluation of the inspections to record the estimated outcome in tonnage, following appropriate yields and support the confirmation of non-mixing products. When these activities are performed by different legal entities of the farm, the risk of mixing products criteria is called Chain of Custody. GLOBALG.A.P. Risk Assessment on Social Practice – GRASP Good Aquaculture Practice is not just about production process; it’s also about people. That’s why GLOBALG.A.P. members developed GRASP, a GLOBALG.A.P.+ Add-on product.  It is a voluntary ready-to-use module developed to assess social practices on the farm, addressing specific aspects of workers’ health, safety and welfare. It is designed to extend the social standards of the GLOBALG.A.P. certification and measures can be assessed together with the GLOBALG.A.P. audit. A GRASP-trained GLOBALG.A.P. auditor or inspector conducts the GRASP assessment of the production facilities. The assessment results are then uploaded to the GLOBALG.A.P. Database, showing the level of compliance, and are then visible to industry supply chain partners and buyers who have been granted access. GRASP helps producers establish a good social management system on their farms. It offers buyers added assurance. And it helps protect one of the farm’s most important resources: it’s people. Figure 2 GLOBALG.A.P. Aquaculture holistic approach GLOBALG.A.P. Aquaculture certification is linked to the scientific name, reducing  the risk of mislabeling. Current species certified worldwide (update Aug13): - Atlantic salmon  [Salmo Salar]- Barramundi [Lates calcarifer]- Coho salmon [Oncorhynchus kisutch]- European seabass [Dicentrarchus labrax]- Gilthead seabream [Sparus aurata]- Meagre [Argyrosomus regius]- Nile Tilapia [Oreochromis niloticus]- Pangasius Basa [Pangasius bocourti]- Pangasius Tra [Pangasianodon hypophthalmus]- Rainbow trout [Oncorhynchus mykiss]- Red Porgy [Pagrus pagrus]- Salmon trout [Salmo trutta trutta]- Sharpsnout Seabream [Diplodus puntazzo]- Turbot [Scophthalmus maximus]- Whiteleg shrimp [Litopenaeus vannamei] The certified species above mentioned can be found in 29 countries (update Aug13): In order to comply with the full production chain, the offer of Compound Feed GLOBALG.A.P. certified can be found currently in 16 countries (update Aug13): Brazil; Chile; Denmark; Ecuador; Faroe Islands; France; Indonesia; Italy; Honduras; Malaysia; Norway; Peru; Spain; Thailand; Turkey; Vietnam. The coverage of the full production chain reduces the risk overall of the lack of traceability. Management of risks is a day-to-day learning process and feedback from the field in terms of implementation of the standard and interpretation by the third party audits are constantly taken into consideration in order to provide improvements to the standard thus promoting continuous improvement in the management practices overall, including risk management. For developing countries, GLOBALG.A.P. certification system has proven not to be a trade barrier. Even if it could be considered stringent when compared to local legislation, developing countries have proven able to implement responsible practices and risk management requested through the standard. This last is used as a guide for responsible production processes practices. Source - FARMD


Reducing Risks and Maximizing Benefits of Aquaculture – NACA’s Role

Introduction Aquaculture is one of the fastest growing primary food producing sectors today. Aquaculture in Asia and the Pacific region is now contributing more than 90% of global aquaculture production – about half of all fish consumed worldwide - and provides a very important source of livelihood for rural communities. Aquaculture, as an enterprise and industry, faces several risks including infectious diseases, food safety concerns, environmental degradation, social, trade and economic issues.  Though not a risk per se, another key feature of the sector that makes risk management often difficult is the small scale nature of operators and operations. Most aquaculture in Asia is undertaken by large numbers of relatively small scale farmers. The biggest challenge, therefore, is to empower small scale farmers to farm responsibly and at the same time preserve these ecologically fragile systems for future generations.  There is no simple answer to this challenge. Small scale farmers are too important in overall production terms to ignore and they should be part of the solution to many of today’s risks facing the industry.  This is only achievable through their involvement and empowerment. What is NACA? Network of Aquaculture Centres in Asia Pacific (NACA), as an inter-governmental organisation of 18 member states in the Asia-Pacific region, has been supporting sustainable and responsible aquaculture for rural development. Key risks facing the sector at national and regional levels are being addressed through NACA’s five thematic (sustainable farming systems; aquatic animal health; climate change; food safety, quality and certification; genetics and biodiversity) and three cross cutting (education and training; information and communication; gender) work programs. The objective of each of the work programs is to reduce risks to acceptable levels and develop management interventions to sustain the sector for the benefit of fish farmers and rural communities. NACA’s work centres around research and development questions of how best to develop more sustainable production systems as a longer term outcome. We believe that increasing sustainability (the process) is really about changing behaviours; in this case the behaviours of these large numbers of small scale aquaculture farmers. Our work to date has sought to guide, assist and support such behavioural change; for instance through the use of better management practices (BMPs) as part of a broader process of supporting such change. Therefore our efforts are increasingly centered around understanding how to shape or better guide such behavior changes as part of a wider approach of shifting unsustainable practices to more sustainable ones. Here, we provide some insight on the risk management approach (adoption of BMPs through cluster/group approach) promoted by NACA over the last ten years in some of its member states. This approach supports building capacity and awareness of farmers and involves them in the (a) process of identification of risk factors to the sustainability of their operations, (b) development of interventions in the form of BMPs, (c) promoting adoption of BMPs through a cluster/group management approach and (d) ensuring market access through participation in group certification programs. What are BMPs? BMPs in the aquaculture context outline norms for responsible farming of aquatic animals. These are management interventions developed to address the identified risk factors while its implementation is generally voluntary; they are not a standard for certification. Implementation of the BMPs by small scale farmers will help translate principles of responsible farming into reality and ensure the flow of benefits to the farmers, environment and society. Cluster/group management in simple terms can be defined as collective planning, decision making and implementation of crop activities by a group of farmers in a cluster through participatory approach in order to accomplish their common goal (e.g. reduce risks and maximize returns, achieve economy of scale). Aquaculture Certification Aquaculture certification is increasingly becoming important for market access. FAO with partners like NACA and national governments have recently produced Technical Guidelines for Aquaculture Certification (2011), which outlines the norms for a credible certification program. Group certification is a methodology and approach that allows a group of small scale aquaculture farmers to join together towards effective management and functioning, besides sharing certification costs among the group members. This enables them to become competitive in the market with the little resources they have. Implementation of BMPs through this approach (cluster management) will help each member to achieve compliance with standards set by international agencies, public/private certification bodies and trading partners. NACA’s Experience NACA’s experience with BMP promotion work in India, Indonesia, Thailand and Vietnam in relation to key aquaculture commodities, and that in Sri Lanka, Vietnam and Lao PDR in relation to culture-based fisheries (CBF) clearly suggests that BMPs improve yields, safety and quality of products. This is achieved by taking into consideration aquatic animal health and welfare, food safety, as well as environmental and socio-economic sustainability. Key BMP and cluster management work carried out in the region include: (a) Shrimp program in India in collaboration with Marine Products Export Development Authority  MPEDA and National Centre for Sustainable Aquaculture NaCSA, since the year 2000 and ongoing; (b) shrimp farming work in Aceh, Indonesia under the Asia Development Bank ADB project (2005-2009) in collaboration with FAO and IFC; (c) Mekong catfish farming work in Vietnam supported by AusAid (2008-2010) in collaboration with Department of Primary Industries  DPI, Victoria and Research Institute for Aquaculture  RIA2 and Cantho University CTU, Vietnam; (d) WWF-supported work in Thailand and India in collaboration with the Department of Fisheries, Thailand and MPEDA, India, respectively; and (e) Australian Centre for International Agricultural Research ACIAR supported work of strengthening networking and information sharing amongst BMP project implementers in the region.  In addition NACA has also developed BMPs for the farming practices on CBF in Sri Lanka, Vietnam and Lao PDR, under the auspices of ACIAR. More about NACA’s work on these lines can be found in our website ( Conclusion Overall, aquaculture BMP adoption in the region is increasing – which illustrates that successful changes are possible even for small scale farmers as described above. We believe that it is this increased understanding about how to better promote such behavior changes that will be of increasing importance in the future moves to more sustainable practices. Additionally, we have also examined farmer behavior changes linked to our evolving understanding of what the key drivers in such change processes are (e.g. catastrophic disease outbreaks, tsunami disaster recovery and/or market linked price incentives). By and large, we note that this work has shown that even small scale farmers (who are the back bone of aquaculture in Asia Pacific) can, and will change, when provided with appropriate enabling mechanisms, access to scientific information and support at the ground level. Risk-free aquaculture is impossible, but NACA’s work has shown that risks can be significantly minimised and sustainable aquaculture promoted for the benefit of mankind. Source - FARMD


Current actions and strategies in tropical Latin America for prevention of infectious disease risks in aquaculture

Aquaculture activities in tropical South America are based mainly on the inland cultivation of white shrimp (Litopenaeus vannamei) and the production of shellfishes, such as Peruvian scallop (Argopecten purpuratus) in Peru.  Latin America aquaculture production has been recently estimated at around 1.8 million tons per year, totaling 3% of world production (FAO, 2012). Given its major part in the economy, aquaculture is also a very important  employer with about 250,000 direct jobs. The major risk that aquaculture producers in the region currently face is infectious disease. There are often inland shrimp farms that are chronically affected for several decades by bacterial and viral diseases, while offshore scallop cultures can also fare poorly  as they are often affected by mortalities whose etiology is usually unknown, except for the recent detection of herpes virus. Combatting Infectious Disease in Aquaculture For the past fifteen years, beginning with the worldwide outbreaks of white spot syndrome virus (WSSV) and infectious mionecrosis virus (IMNV), there have been various  short, medium and long term actions undertaken in several countries to prevent the risk of infectious disease. These initiatives have been implemented by a variety of actors at the university, private sector, and national levels, each with a different role to play in the effort to combat the spread of infectious diseases in aquaculture.  The role of each of these levels of actors, and the initiatives they undertake, are discussed below. The Role of Universities At the university level, programs of molecular biotechnology have been established (University of Guayaquil, Ecuador; University of Tumbes, Peru) for the training of young professionals with thesis works. Applied investigations in these thesis programs have been focused on the development of molecular diagnosis tools that permit prevention of vertically transmitted viruses by individually certifying broodstock. In addition, studies on descriptive and analytical epidemiology of viral and rickettsia diseases have also been performed and research developed in immunology with an emphasis on shrimp defense against viruses. Several universities, including those in Ecuador (Guayaquil, Machala) and Peru (Tumbes), are now also involved in the modernization of their research laboratories, thanks to funding from government policies (SENESCYT-Ecuador; CONCYTEC / Fincyt-Peru).  This funding will support the acquisition of the latest generation of equipment for cellular and molecular biotechnology which will permit research in genomics, transcriptomics, proteomics, lipidomics, metabolomics, etc. This process should lead these university teams, in collaboration with the private sector, to a true aquaculture scientific revolution in their countries, following on from the papers and research regularly published by the leading countries in aquaculture science (China, Thailand, the United States, Europe). The Role of Companies/Private Sector At the company level, many involved in biotechnology or shrimp production have created molecular diagnostic laboratories in Ecuador (Concepto azul, Empagran, Expalsa, Nirsa, etc), Panama (Camaco), Brazil (Potipora Queiros, Compescal), and Peru (Incabiotec, Marinazul). Through broodstock certification, animals free of virus and rickettsia are exclusively used for the production of healthy larvae as “Specific Pathogen Free” (SPF). This strategy has also been applied for mollusk in Peru (Anadara tuberculosa) and should soon be applied to the certification of Peruvian scallop broodstock (Argopecten purpuratus) that they are free of herpes virus (Incabiotec). Some private companies specialized in biotechnology have contributed to knowledge and understanding about managing risks in aquaculture by transferring their published results to production companies. Companies such as Concepto azul (Ecuador, Brasil) and Incabiotec (Peru) and have developed basic and applied research in microbiology, pathology, immunology, and genetics for shrimps, molluscs and fishes which can be analyzed alongside the work done by universities. Several companies are also producing shrimp larvae through domestication programs with parameters more or less reliable at the genetic level. A few companies have actually implemented programs for genetic improvement considering the growth and / or resistance on the basis of the selection of specific pathogen resistant animals (SPR). Such resistant animals are selected by surviving to strong experimental infections performed at each generation, including WSSV (Camaco/Concepto azul; Marinazul/Incabiotec) and / or IMNV (Queiroz Galvao/Concepto azul). Some of these programs are currently developed according to the strategy known as GAS (Gene Assisted Selection) using immune markers related to virus resistance (ARN interference). While there are several programs in Latin America geared toward genetic improvement, biotechnology and certification, there is presently no research in Latin America on shrimp genetic transformation through trans-genesis, cis-genesis or directed mutagenesis with zinc-finger nuclease. These areas will need to be addressed going forward in order to take deeper action against invasive species in aquaculture. At the National Level It must be noted that several governments (Peru, Panama, Brazil, Ecuador) have creates pipel ines of grants for universities and / or the productive sector to support research in aquaculture. According to national policy, these grants promote in various ways the aquaculture and aquaculture diversification (Ecuador/Prometeo/Senescy for the development of social aquaculture and aquaculture biotechnology;  Peru/Fincyt/Fidecom to support companies involved in aquaculture etc.). Governments have also modernized their diagnostic laboratories and strengthened their epidemiological surveillance programs. Conclusion Going forward, through the leadership of international institutions, it will be very beneficial to set up a regional center of excellence and a network for aquaculture biotechnology to develop research programs in pathology, immunology and genetics that will permit to efficiently prevention risks of infectious diseases in currently and proximally cultivated crustaceans, fish and mollusks. In doing this, Latin America will take a giant step forward in being able to identify and manage infectious disease risk in aquaculture. Source - FARMD


Disease Management in Aquaculture

Aquaculture is growing, but disease is a big issue Aquaculture has been the fastest growing animal protein production sector for the last 20 years. In 2010 world aquaculture production recorded an all-time high of 59.9 million metric tons of fish for human consumption, with an estimated value of US$119 billion (FAO 2012).  Aquaculture’s contribution to world food fish production steadily increased from 9% in 1980 to 47% in 2010 and is projected to surpass that of capture fisheries by 2015 (OECD-FAO 2011). Behind the rapid aquaculture expansion is growing seafood demand driven by population growth, rising incomes and changing consumer preferences, and the continued trend of seafood demand growth represents investment opportunities. The Global Aquaculture Alliance, among others, has estimated US$100 billion of investment opportunities. However, constraining private investment is the risk of diseases, which represents one of the major risks to aquaculture operations. Fish diseases have cost the global aquaculture industry tens of billions of dollars over the last 20 years. The world’s shrimp industry has suffered losses from white spot virus and infectious myonecrotic virus on the order of US$10 billion since 1990 and new diseases emerge on a regular basis. Vietnam alone reports losses due to disease of US$1 billion per year on average. The Chilean salmon farming industry is in the process of recovering from a severe outbreak of infectious salmon anemia, which began in 2007 and cost 350-400 thousand tons of fish, US$2 billion of revenue and some 30,000 jobs. Therefore, addressing fish disease issues is a necessary condition for securing new private investment in aquaculture. Below we discuss the importance of commitment both at the producer level and at the national regulatory level in order to have an aquaculture investment-ready environment in place. Prevention at the farm level One major contributor to fish disease outbreaks is disease pathogen incursions due to international transfers of live aquaculture animals and other fish products. However, once pathogens enter a country, much of disease prevention efforts fall on the shoulder of producers. Good practices at the farm level for disease prevention are generally known and well documented. The most important and widely used in well-advanced systems are: - Exclusion to keep pathogens out of a production unit. In its most advanced form, exclusion involves eliminating water exchange with the surrounding environment through the use of aeration. - Management. There are other management practices to reduce disease occurrences, including careful control of stocking density, water quality and nutrition that minimizes stress of fish and maintain healthy populations in the culture environment.- Genetic resistance. Producers can use pathogen-free seed and those selectively bred for genetic resistance. This requires virtually no changes in farm infrastructure. However, experience with shrimp indicates that it takes 5-10 years to develop genetically resistant stocks.  Supplementing genetic resistance is the use of vaccines. The Norwegian salmon industry has mostly replaced antibiotics with vaccines. Prevention at the community level Moreover, as with many diseases of terrestrial animals and pests and invasive species, fish diseases usually do not stay on farms.  Once introduced, pathogens can and do spread to other farms via the water supply, birds and wild fish and other vectors within the ecosystem. Consequently, producers’ efforts to control disease tend to be interdependent, that is one farm’s practices affect the likelihood of disease outbreak, and hence the prevention practices, on another farm. Because of this interdependence, the aggregate system-level prevention effort tends to be less than desirable in unregulated systems (Kobayashi and Melkonyan 2011). As a result, even if the majority of farms practice good disease management, a single irresponsible farm that introduces a new disease can result in collective disaster. Regulation Because leaving disease prevention to individual producers does not guarantee protection from either introduction of new diseases or exacerbation of existing conditions, the public sector has an important role to play in disease management. The first line of defense is at the border level to prevent disease pathogens from entering a county. Strict quarantine measures and secure sourcing of transferred animals from pathogen-free hatcheries can help to minimize the threat. Additionally essential to the stability of the industry are: spatial planning to separate farms so that diseases cannot easily move and early detection systems supported by competent veterinary authorities and rigorous control of the movement of cultured animals. Behavioral aspect, as manifested in interdependence of individual producer practices, also needs to be considered in the regulatory framework. Unfortunately, most catastrophic disease outbreaks have occurred in developing countries, where over 90% of aquaculture production takes place and where regulatory systems and veterinary services are weak. Conclusion By addressing these findings in aquaculture management and regulations, risks for catastrophic disease outbreak will be reduced, creating a more secure environment for much-needed new investment in farmed seafood production. With a suite of private and public sector partners, the World Bank is working to modernize and improve aquaculture for food security and job creation by tackling the problem of fish disease at the national regulatory level. Case studies in Chile and Vietnam have identified key causative factors behind disease outbreaks in farmed salmon and shrimp and elucidated the ways and means for successful recovery from disease outbreaks. Source - FARMD


Development and Perspectives of Multiple Risk Insurance in Italy

INTRODUCTION  Multiple risk insurance in Italy is barely old enough to go to school, having celebrated its sixth birthday this year. Compared with the ripe old age of the hail policy, its older sister, we could expect it to be barely able to walk alone and say a few words. On the contrary, it has shown a surprising ability to learn fast, and grown by leaps and bounds and now has some important prospects before it. BACKGROUND AND REFERENCE STANDARDS If multiple risk insurance now shows accelerated growth, the gestation was, however, long and difficult. It took three years before the first policy came into the world. The zero meridian of multiple risk in Italy is represented by art. 127 of law 388, enacted in 2000, which establishes the Reinsurance Fund at ISMEA, i.e., a reinsurance instrument financed with public funds. That same law also specified the terms of public intervention in support of the payment of the premiums relative to “multiple risk and global policies on farm productions”. The legislator moves in two directions: on the one hand, he sets the terms of public intervention in support of the agricultural entrepreneur who purchases the guarantee, on the other he constructs an instrument to safeguard the budgets of insurance companies willing to venture into a heretofore unexplored area of business. Two years later, in 2002, a ministry decree established the operating methods of the Reinsurance Fund with the proviso that it must have as its first priority multi-risk coverage. The intentions of the legislator at this point are very explicit: to support the birth and development of innovative forms of insurance for our country that would broaden the range of possibilities offered to the agricultural enterprise to protect its production against every type of damaging event, while at the same time bringing about a cultural transformation. It was a matter of changing from a subsidizing model, in which the government intervenes after an event to repair the damage caused by calamities, to a risk management model, where the entrepreneurial choices participate in a priori risk management. The decree, that contains references to even more advanced forms of insurance such as those on revenues or income, also contains a definition of multiple risk insurance: “insurance contracts that cover the result of the production measured as quantity of product per crop area, taking account, if necessary, also of damage to the quality.” It is a definition that contains the basic concept of the multiple risk policies and that will then be developed in the years to come, through the evolution of the insurance products. Thus, in 2003 multiple risk policies first appeared on the Italian insurance market. It was a timid appearance, just 40 policies for less than a million euro of insured value, because the reinsurance fund would only receive the approval of the European commission in July of that year, and did not really become operational until 2004. As soon as the companies on the market could count on an adequate reinsurance, the number of policies signed, and the volume of business, began to grow starting from almost 11 million insured value in 2004 to reach 305 million in 2008 . At the end of 2007 there came another new boost, with the establishment of the Coreinsurance Consortium for Natural Calamities in Agriculture. COREINSURANCE CONSORTIUM The activity performed by the Reinsurance Fund to encourage the spread of multiple risk policies came up against the limits of the fund’s financial endowment, which did not have the strength to satisfy a steadily growing demand, and the lack of expansion of the experience acquired by the individual insurance companies, which jointly might have been able to convince the insurance and reinsurance companies to extend their participation in the project. Consequently, it was found desirable to create a structure that could accelerate the spread of multiple risk policies that, in the preceding years, had found interest on the part of the farmers and that, through the joint management of private insurers and reinsurers could guarantee on the one hand a greater underwriting capacity and, on the other, capitalize on the experience acquired on new risks, in terms of both product structuring and liquidating technique. The by-laws of the consortium establish in these terms its institutional aims: “the Consortium is established for the purpose of promoting the introduction on the agricultural market of innovative insurance policies against natural calamities and atmospheric adversity as they relate to agriculture, through the division of the risks among the Consortium member companies, in order to offer the agricultural enterprises new insurance instruments to defend their production.” More in particular, the Consortium pursues the aims of: 1. promoting the spread, in Italy, of innovative insurance policies against natural calamities and atmospheric adversities as they relate to agriculture, in accordance with the terms of the National Agricultural Insurance Plan, and reinsurable as foreseen by the Annual Agricultural Reinsurance Plan; 2. to establish the technical rules for management of the reinsurance of these policies; 3. to divide the risks insured with the aforementioned policies among the Consortium member companies. 4. to promote, through ISMEA, the exchange of information on the technical performance of the risks with similar organizations abroad; Most of the Italian companies active in the hail sector, and 4 of the main international reinsurers, have joined the consortium, with the public Reinsurance Fund that holds the majority in the consortium . Ismea, which has its offices at the Consortium headquarters and guarantees its operations through its own resources, presides over the consortium, while the two vice-presidents directly represent the market and the reinsurance sector. THE MULTIPLE-RISK POLICY Now that we have summarized the history of the development of this type of coverage on the Italian insurance market, it is time to describe the structure of the insurance product that we define as multiple-risk. First, however, we must take a brief detour to illustrate how the Italian government contributes to payment of the insurance premium on behalf of the farmers, an aspect that has always played a fundamental role in the spread of the policies against atmospheric calamities in agriculture. POLICIES WITH AND WITHOUT THRESHOLD In accordance with the terms of the EU directive on the subject of government subsidies, the public contribution to payment of the insurance premium against atmospheric calamities in agriculture can be as high as 80% of the total if the policy applies the reimbursement mechanism only in case of damage equal to at least 30% of the value of the production insured. This limit of 30% is called the threshold and is what makes it possible to equate hail to other catastrophic events. If this is not the case, that is, if the policy does not contain any type of threshold for access to reimbursement, the public contribution may not exceed 50% of the insurance premium. The basic risk unit, on which the percentage of damage, and thus the threshold, is calculated, starting this year, is the entire farm production for the municipality and product. This means that if, within the same municipality, the approximately 8000 territorial administrative units into which Italy is divided, the insured farm owns several fields planted with the same crop, even distant from one another, they are considered as a single risk unit. Therefore, to obtain a public contribution of 80% of the insurance cost, the policy must specify two conditions: the first being that the repayment mechanism goes into action only when the damage exceeds 30%, and the second being that the minimum risk unit shall be the entire production of the farm per municipality and product. In the absence of one of the two conditions, the public contribution may not exceed 50%. As we shall see, there are multiple risk policies on the market with and without threshold. SUBJECT OF THE INSURANCE The article of the policy that defines the subject of the guarantee states: “The insurance company indemnifies the loss or reduction of production of the insured crop and quality damage, if foreseen by the special conditions…….” As we can see, the definition is taken directly from that contained in the Ministry Decree of 2002 and seems very generic. These are the definitions contained in the policy, that will enable us to understand more clearly exactly what is covered by the guarantee: PRODUCTION The result (yield) of the entire farm enterprise, relative to the crop insured and grown on land in the same municipality PRODUCT The individual botanical species or subspecies, as defined in item 1.1 of art 1 of M.D. 102,971 dated December 27, 2006, and specifically: For multiple risk policies with fixed exemption with and without threshold: Fruit: Kiwis, Apricots, Persimmons, Cherries, Apples, Nectarines, Pears, Peaches, Plums; Wine grapes: the guarantee refers to the entire wine grape production of farms producing wine grapes labeled D.O.C., D.O.C.G., I.G.T. and common grapes. Clearly, for the reference yield per vineyard subject to the labeling (D.O.C, D.O.C.G. and I.G.T.), it will be necessary to consider the unit foreseen by the discipline. Industrial tomatoes: this refers to all production intended for the canning industry (peeled tomatoes and tomato concentrate); Corn: refers to the all production intended for meal, feed and sweet corn; Rice; Grain (common and durum). For multiple risk policies with scaled exemption and threshold: Fruit: Kiwis, Apricots, Persimmons, Cherries, Apples, Nectarines, Pears, Peaches, Plums; Wine grapes:the guarantee refers to the entire wine grape production of the farm enterprise for D.O.C., D.O.C.G., I.G.T. wine and common grapes. Clearly, for the reference yield per vineyard subject to the labeling discipline (D.O.C, D.O.C.G. and I.G.T.), it will be necessary to consider that foreseen by the discipline. INSURED YIELD By insured yield is meant the mathematical product of the average farm production per hectare for the area declared. The average farm production is the average production obtained, by unit of area cultivated with crops in full production in the preceding three years, or on the average of the three-year production, calculated on the three preceding years excluding the one with the lowest and the one with the highest production. In the absence of data from the farm enterprise, the municipal average per hectare in the last five years will be used, discarding the best and worst annual result obtained or, if not available, the same average of a neighboring municipality with similar production potential per unit. This means that the multiple risk policy insures the historical output of the farm enterprise, for each species grown, in the entire municipal area, and reimburses both the quantitative and the qualitative loss where foreseen by the conditions of the policy. The reference to historical output makes it possible to focus the coverage on extraordinary events, not on those that ordinarily occur to reduce or affect the size of the crop. The reference to the entire municipal area aims at providing the guarantee when the event strikes a large area of the farm and thus has significant effects on its economy. EVENTS INSURED The same article that describes the extent of the coverage continues as follows: “………..caused by the following atmospheric adversities: Hail, Freezing and Frost, Strong wind, Drought, Excess of rain, Flooding, Excess sunlight, Violent thermal excursion, Excess of snow and South winds, if these events are foreseen by the National Farm Insurance Plan as established in Legislative Decree no. 102/04 and subsequent amendments” The text emphasizes two things. The first is the wide range of events covered, representing almost every type of adverse weather that can have negative effects on crops, and the second is the reference to the National Farm Insurance Plan. This is a document to which all the organizations involved refer: the ministry, the regions, the insurance companies and the farmers’ representatives, and that defines the terms within which the government will provide aid, for example by defining which crops and which events will be subsidized. Since they may differ from one region to another, reference is made to the document in the description of the coverage. One of the difficulties encountered in defining the events insured, at least for some of them, is to provide objective, measurable elements that will enable the contracting parties but also the appraisers to make correct estimates of the damages, which must be identified with certainty and ascertain to what extent they are covered by the guarantee. EXCESS OF RAIN: Excessive and/or prolonged precipitation with respect to the averages for the period (over 80mm of rainfall in 72 hours), causing damage to the crops insured. The effects of this event must be encountered by a number of farms and/or adjoining or nearby crops, within a radius of 3 km, and impinging in zones having similar orographic features. DROUGHT: Extraordinary shortage of precipitation, equal to at least one third of the normal amount for the period, causing a reduction of the water content of the soil below the critical moisture limit and/or impoverishment of the sources of irrigation that make it impossible to come to the aid of the crops. This event must cause decisive effects on the physiology of the plants insured, thereby jeopardizing the insured production. The effects of this event must be encountered by a number of farms and/or adjoining or nearby crops, within a radius of 3 km, and impinging in zones having similar orographic and pedoclimatic features. We have tried to define parameters that refer to the intensity of the event measured, 80 mm of rain, the reduction by at least one third of precipitation, as well as its amplitude, with effects visible within 3 km of the insured crops. EXCLUSIONS Just as important as the list of events covered is the list of events excluded, which delineate the perimeter of the insurance clearly and unequivocally. The following events are excluded: a) damage caused by earthquakes, tidal waves, bradyseismic activity, volcanic eruptions, landslides, earthfall or mudslides, snowslides and rockslides unless the contracting or insured party can demonstrate that the damage has nothing to do with these events; b) creek formation; c) elevation of the water table; d) lowering of the water table causing a saline wedge phenomenon; e) fire; f) damages caused by any other event not covered by the guarantee that precedes, accompanies or follows an insured event; g) damages caused by improper agronomic or cultivation practices; h) damages due to malfunctions or breakdowns of the irrigation system; i) damages due to crop diseases; j) damages caused by any type of environmental pollution; k) growing crops on floodplains, meaning by this land located between the riverbank and the artificial embankment, i.e. that portion of the riverbed that is only covered by water during flood tides; l) untimely harvesting of the crop for any reason (weather, market reasons, unavailability of commission harvesting machinery, etc.); m) damages due to physiological causes and/or normal rotation of crop production. EXEMPTIONS AND LIMITS OF INDEMNITY A policy that covers such a broad range of risks must necessarily require some participation in the risk by the insured party and thus presents exemptions and limits of indemnity, which are usually higher than those typical of simple hail insurance. They vary depending on whether the policies are with or without threshold and depending on the product insured. There is also the possibility, limited to certain products, of acquiring a scalable exemption, that decreases, for example, as the percentage of damage increases. QUALITY DAMAGE In addition to the loss of output, all crops insured, with the sole exception of grain, also cover quality damage, though limited to certain events, and specifically: -          wine grapes: hail, excess rain, south winds and excess heat; -          fruit: all events; -          industrial tomatoes, corn and rice: hail. CONCLUSIONS “every thousand-mile journey starts with one small step” With this presentation I hope I have succeeded in describing the not always linear, simple process by which the multiple risk insurance policy joined the other options that Italian agricultural enterprises can exercise to safeguard their income from atmospheric calamities. The sometimes different goals of the various players involved in this process made it necessary to proceed one step at a time, and it was not easy. The agricultural enterprise is still linked to a hypersecure model of insurance, heavily subsidized in terms of cost and with minimum limitations of exemption and threshold, still a long way from the model of coverage to safeguard the company GMP or income that, in the long run, is the natural goal of the multiple risk policy. The insurance or reinsurance companies eye with suspicion all the guarantees against the effects of those climatic events that have been increasing in frequency in recent years and have a negative effect on the corporate balance sheet. The government, attentive to the limits imposed by national and international laws and the cost of allocations in support of the agricultural enterprises, has gradually attempted to amend the instruments of aid going from economic subsidies to structural and legislative improvements. We are all aware, however, that the progress toward an insurance model that covers only damages that have an effect on the business economy of the farm, leaving the lesser damages for the account of the farmers, but also extending the insurance coverage to most of the calamities to which they are exposed, is the most advanced model today of partnership between agricultural enterprises, insurance companies and the government. The data show us an increasing spread, in both geographical terms and in terms of crops insured, of these policies that, over the years, have also expanded to extend coverage to an increasing number of adverse events. However we are still a long way from stabilization of the technical results, that are still affected by the relatively small portfolio, the scarcity of a statistical base and liquidative experience, while the success of the format is still hampered by the competition of more experimental policies like the single risk hail policy or the plural risk, but in particular, it will have to overcome the resistance of that multitude of farmers who still do not protect their production with insurance policies, as they have been unable to find satisfactory responses from the products traditionally offered. So we certainly still have a great deal to do, but we are firmly convinced of the potential we can express with this new insurance instrument. It will be up to us now to create the conditions for our infant multiple risk policy to grow up. Author: Dr. Luigi Avagliano, Direttore Centrale, FATA Assicurazioni, Rome


Agricultural crop insurance in Poland (2010) (document)

Author: Aleksandra Szelągowska, MARD, Poland File:  ALEXANDRA SZELAGOWSKA Polish government considers insurance to be the most useful tool of good risk management in crisis situations Legislation applied Agricultural insurance in Poland is regulated by several legislative acts, inluding: - Act of 7 July 2005 on agricultural crop and livestock insurance (Dz. U. No 150, item 1249, as amended) - Act of 22 May 2003 on compulsory insurance, Insurance Guarantee Fund and Polish Motor Insurers' Bureau (Dz. U. No 124, item 1152, as amended). EU regulations are also applied, namely: - Community guidelines for state aid in the agriculture and forestry sector 2007 - 2013 (OJ C 319 of 2006) -  Chapter V - Commission Regulation (EC) No 1857/2006 of 15 December 2006 on the application of Articles 87 and 88 of the Treaty to State aid to small and medium-sized enterprises active in the production of agricultural products and amending Regulation (EC) No 70/2001 (OJ L 358 of 2006) – Article 12 - Council Regulation (EC) No 73/2009 of 19 January 2009 establishing common rules for direct support schemes for farmers under the common agricultural policy and establishing certain support schemes for farmers, amending Regulations (EC) No 1290/2005, (EC) No 247/2006, (EC) No 378/2007 and repealing Regulation (EC) No 1782/2003 (OJ L 30) – Articles 69 and 70 Features of subsidized agricultural insurance Large enterprises and enterprises active in the processing and marketing of agricultural products are excluded from the aid. Subsidised insurance may not be available in one insurance company or one group of companies only. This provision helps to maintain healthy competition at the market. The government covers 80 % of premium in the case of insurance against losses caused by unfavourable atmospheric conditions comparable to natural disasters. At the same time 50 % of premium is subsidized in the case of insurance against losses caused by unfavourable atmospheric conditions and animal or plant diseases or pest infestations. Insurance coverage is offered against weather conditions, such as: frost, hail, ice, rain or drought, which cause losses exceeding 30 % of the farmer’s average annual production for the previous three years or the average for three years determined based on data from the previous five years, excluding the highest and the lowest value.  State budget subsidies to agricultural crop and livestock insurance (EUR 1 = PLN 3.9)   Year Allocated in the Budget Act (EUR million) Used                     (EUR million) 2006 14.1 2.5 2007 53.9 8.1 2008 139.7 38.4 2009 38.5 33.4 2010 76.9   Insurance policies purchased by farmers with budget subsidy Year Number of policies - in total Agricultural crop insurance policies Livestock insurance policies Area of agricultural crops insured (ha) 2006 11,056 10,738 318 311,740 2007 28,828 28,412 416 575,029 2008 87,370 87,150 220 1,832,036 2009 144,328 144,080 1,248 2,808,105 Cash flows in agriculture related to property and personal insurance in 2006 – 2008 in PLN million based on IERiGŻ data   Year Property and personal insurance contributions Property and personal insurance claims Balance 2006 417 153 264 2007 486 319 167 2008 524 315 209 Direction of Changes The state budget contribution to compensations by means of a reasecuration system covering, apart from drought, the other risks specified in the Act of 2005 Using the Community budget in line with the rules which will be applicable after 2013 Aleksandra Szelągowska, MARD, Poland

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