The sugar cane, first introduced in Mauritius in 1639 was to become the country?s very lifeblood. Then, largely due to the efforts of the sugar industry itself, the local economy was extensively, and intensively, diversified through other forms of manufacturing, export processing, tourism, off-shore banking and related activities ? currently aiming at around a dozen economic pillars in the foreseeable future. Even so, the sugar cane is set to remain important in terms of agriculture, energy and the environment; foreign currency earnings, employment; and the Gross Domestic Product.

The idea of insuring the Mauritian sugar cane against the weather, one of long standing, became a reality when cyclone-damage in 1945 precipitated matters at governmental level, and at the local Chamber of Agriculture. The very next year saw the formal establishment, in October, of a Cyclone and Drought Insurance Fund through Ordinance No 53 of 1946 with compulsory insurance for all cane planters and millers, and an obligation on the latter to provide all relevant information to that Insurance Board, with powers to inspect fields and refuse compensation for deliberately neglected or abandoned cane fields.

The insurance premium levied through the Mauritius Sugar Syndicate as the sole sugar marketing agency, first corresponded to 4.50% of the value of the average quantity of the sugar harvested during three preceding ?normal? years. Compensations meant to cover both production costs and profits foregone, were also payable via the Syndicate on official declaration of ?event? years (due to cyclone and/or droughts), except for a first tranche of 5% of total loss to be borne by the insured parties themselves.

A Board ?to administer and control? the Fund was set up as a not-for-profit body-corporate. In 1965, the Board was composed of the Financial Secretary as Chairman, and nine other members, three ex-officio. By 1989, the Chairman was being appointed by the Minister of Finance, answerable to Parliament on SIFB matters; the public sector had five representatives (Finance:1; Economic Development:1; Agriculture:3) with the private sector also having 5 representatives (Chamber of Agriculture:1, Planters:4; and Millers:1).The Board, privately funded, has proved to be a most effective ?private-public partnership? well before the label was invented?

<B>From one scrutiny to another</B>

Over its 60 years of existence, the SIFB has encountered many a scrutiny ? from the occasional Commission of Enquiry to the annual National Audit exercise and from periodic actuarial investigations to many a complaint at times evergreen.

Thus, the Commission of Enquiry headed by Professor J.E. Meade (1960) while insisting that the Fund should meet ?serious loss? while avoiding excessive premiums also asked:

1. whether compulsory insurance should cover such a relatively high proportion of losses from weather damage? Or should it not simply cover, say, a half of such loss? Or should the insured party meet the first 20% or 30% of any loss, leaving any insurance in excess to the decisions of the planter or miller? and

2. whether the definition of a ?normal"?year was proving entirely satisfactory?

Since its inception, the SIFB has been externally audited by the Director, National Audit Office. Over the past 10 years, for example, that Office has given a ?clean bill of health? to the Board.

The SIFB Act of 1974 made provision for the appointment of a Consulting Actuary at least every 5 years to review the position of the Fund, and, advise the Board of the latter concerning interalia the Second Schedule percentages, relating to premiums, compensations and ranking.

The drought of 1999 and the projected severe drop of sugar export prices to the European Union also became the subject of a set of actuarial exercises, 1998-2006. The primary actuarial conclusion was that the ?solvency of the Fund is not at immediate risk?.

Reviewing the position of the Fund up to 1981, the Consulting Actuary concluded that ?the basic structure of the Fund was sound and that there was no feature of its working which caused appreciable concern.? By 1994, the Consulting Actuary reported that the position of the Fund had remained more or less stable in real terms, and that ?the structure and workings of the Fund were sound.?

<B>Exploring the future</B>

The drought of 1999 and the projected severe drop of sugar export prices to the European Union also became the subject of a set of actuarial exercises, 1998-2006. The primary actuarial conclusion was that ?the solvency of the Fund is not at immediate risk.? The actuarial recommendations approved by the Board and the Government, now await legislative and executive action.

Mauritian sugar cane insurance has distinct and unique features, which makes it a focus of attention in world agriculture even if complaints exist and persist, some evergreen, including anonymous ones (all of which are currently liable to be scrutinised), spanning unduly high premiums, unduly low or tardy compensations, the phenomenon of ?cane shifting? (costing the Board Rs 50 million a year), various delays, the compulsory nature of the insurance cover, excessive bureaucracy, favouritism, non-provision of credit facilities (faisance-valoir) and the like.

The SIFB is itself currently reviewing its basic approach concerning the insurance (inclusive of ever costlier reinsurance) of the sugar cane against bio-weather and accidental fire within an overall framework comprising, inter alia of:

(i) crop-weather models, associated with climate-change phenomena, predicting more frequent and severe events such as cyclones, droughts, floods, etc.

(ii) the relative decline of the Sugar Industry within the national economy.

(iii) the continuing need for the Sugar Cane Industry and its institutions to reduce costs of operation with an overall policy of high-tech re-structuring;

(iv) the desirability of a wider and more flexible portfolio of insurance, and related, schemes covering Agriculture and the Environment, tapping private and public sector sources within Mauritius, within the Southern African Region and worldwide, while enhancing consumer and communication services (for example, not unlike the manner in which house-mortgage companies have been transformed into banking institutions elsewhere).

The idea is to work out an integrated plan containing the essential points of the above covering the next 5 to 8 years, as the Fund gears itself towards meeting numerous challenges in the early 21st century. Not least will be to find a judicious blend for the SIFB (by whatever name) between being a ?friendly-provider? and a ?stern-controller? something manifestly rare, keeping the organisation ever-awake.

Acknowledgements : The ready assistance, critical comments and helpful suggestions provided to the authors by the Board of Directors, staff and other stakeholders are gratefully acknowledged. The views expressed how-ever, remain those of the authorsend not necessarily those of the Board or any one else.

<B>Jagadish MANRAKHAN, </B> Chairman

<B>Diness PURRYAG</B> General Manager