Structure of the Institute

The structure for the Institute has two main concept components: non-profit and virtual

The non-profit component is attractive from two perspectives. First, since this is an international institute, a non-profit entity may have more widespread acceptance with under-developed and developing countries. In these situations, governments may be instrumental in either guiding or supporting the notion of a crop insurance scheme to stabilize agriculture as part of a broader public policy. Technology transfer from an organization with no direct profit motive may appeal to these countries where financial resources are constrained. Similarly, donor agencies from developed countries providing assistance in support of agricultural initiatives in under-developed or developing countries may be more apt to utilize the services of a non-profit entity and/or subsidize the enrollment of participants to courses provided by a non-profit entity. The World Bank has traditionally been involved in securing funding from donor countries to support feasibility studies and the development and delivery of crop insurance and agricultural risk management schemes in under-developed and developing countries. While they contract with private sector consulting firms for specific tasks, the expected project scope is often at odds with the budgetary allotment to develop viable solutions. Providing technology transfer through an institute setting, where a number of countries can be involved simultaneously, would be efficient and, as a non-profit entity supported by the private sector, an attractive structure in a multi-donor agency environment.

The second advantage of a non-profit structure is that it provides primary contributors from the private sector with a means to financially support the Institute in a “tax-friendly” environment. While there are numerous positive benefits from an Institute approach, they accrue over time to the primary contributors financing the curriculum development. The tax-friendly environment of a non-profit entity provides an opportunity for those primary contributors to gain positive benefits for their support in the short term as well as over time.

The virtual component of the Institute simply means physical resources are not required specifically for the Institute. Physical office space and assets to manage and administer the Institute will be provided to the Institute on a fee-for-service basis by Watts and Associates, Inc. (W&A) who have an extensive background in crop insurance and agriculture risk management in the United States and abroad. Facilities for courses will be arranged on an as-needed basis and geographically located to suit client groups when practical. Primary contributors with a global network will play an important role in marketing the Institute to prospective participants as well as in locating suitable facilities for course delivery. Institute faculty and support resources will be acquired by contract on an as-needed basis. The Institute would not retain salaried positions until and unless justified by participation levels. This approach leverages the Institute resources to maximize the benefits.

A board of directors including representatives from primary contributors will be established to manage the Institute. Since the first task is to develop course curricula, the size of the board will be limited, with representatives from both W&A and additional primary contributors. Intial board members identified are Mr. Rick McConnell, Mr. Tim Watts, and Dr. Myles Watts. A limited board size ensures the board is responsive and available to provide oversight during the Institute startup phase and course development. Board members will be appointed for a set time period (i.e., three-year term) with the option for a one-term renewal. The vacancies in the board of directors will be filled by a vote of the current board members.

The primary contributors will assume distinct responsibilities for the development and maintenance of the Institute. In addition to being responsible for filling board member position(s) on an ongoing basis, primary contributors would:

  • provide funding to develop the course curricula;
  • promote the Institute to prospective clients;
  • provide faculty resources (hourly rate charge to the Institute);
  • contribute to course curricula (hourly rate charge to the Institute), and
  • act as course presenters in areas of the curricula geared to their areas of expertise (hourly rate charge to the Institute).

In addition to being responsible for filling board member position(s) on an ongoing basis, W&A will:

  • source faculty resources and/or sub-contractors to develop the course curricula and to act as presenters on an as-needed basis (hourly rate charge to the Institute);
  • provide “hard assets” (office space, computer systems, etc.) to support the Institute (monthly lease charge to the Institute);
  • provide administration support and legal expertise to support the Institute and coordinate its activities (hourly rate charge to the Institute); and
  • provide intellectual property to the development of course curricula.

Click here for a schematic representation of the structure of the non-profit Institute. Although not an exhaustive list, contributors to the Institute can expect to receive benefits in several ways with varying appeal depending on their organization’s focus.

Governments and Non-Profit Organizations/Foundations

  • an efficient means to transfer and/or acquire agricultural risk management technology from experts throughout the world;
  • a practical means to create and maintain the resident expert base that is required to implement and maintain a viable agricultural insurance program;
  • a means to create a standardized approach to the regulatory framework, design, and operation of insurance programs internationally, and enhance the participation of the private sector in agriculture risk transfer globally;
  • an educational/training platform that focuses on mitigating risks inherent in agriculture (often with devastating impacts on the rural poor) that segues to stable family incomes, increased food production, and rural development opportunities;
  • a means to develop sound governance, legislation and agriculture policy frameworks in developing countries that can utilize other government-sponsored local infrastructure initiatives to support the development of crop and livestock insurance and act as a template to other segments of the local economy; and
  • improve the standard of living, human nutrition, and agricultural infrastructure in developing and under-developed countries by:
  • supporting food and feed for disaster response through formalized risk transfer; and
  • allowing rural populations in developing countries to take risks supported by cross-level risk transfer mechanisms.   

Insurance, Reinsurance and Brokerage Firms

  • increased opportunities for agricultural risk transfer to the reinsurance and capital markets (i.e., increased reinsurance volumes);
  • increased profile with international agencies supporting agriculture, governments, donor agencies, and firms that could generate a preferential status when business opportunities for services arise;
  • increased opportunities to develop insurance products with insurance firms in developed, developing, and under-developed markets that require reinsurance capacity;
  • comparative advantage for reinsurance brokerage opportunities during competitive bidding processes;
  • increased profile in the agricultural insurance sector that can segue into other insurance markets;
  • an enhanced quality of risk transfer submissions to the reinsurance and capital markets;
  • the elimination/reduction in the number of irrelevant risk transfer submissions to the reinsurance and capital markets;
  • increased integrity of management, operations, and maintenance of insurance programs;
  • reduced potential for conflict between reinsurance and capital markets with insurance firms and program managers; and
  • opportunity for a U.S. tax deductible charitable contribution.

Storage

Goals for the Institute

Developing Countries:
To develop sustainable agricultural risk management programs for developing countries that result in economic stability and new sources of “risk capital” for their agriculture sectors.

Developed Countries:
To provide a training, succession planning, and “analytical research capability” environment for developed country governments and private companies engaged or expanding their work in agricultural risk management.




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Web Site Last Updated
April 15, 2010