Research and development of algorithms for risk management in agribusiness

Abstract

The MBR Agro is a firm on stage of pre-incubation at ESALQTec, the Business of Technological Basis Incubator of the "Escola Superior de Agricultura Luiz de Queiroz" of the University of São Paulo (ESALQ-USP). The current project aims to develop algorithms for the measurement of rural risks to aid the strategic decisions making of farmers and financial agents. To achieve the goals of this project, the methodology proposes an innovative way to evaluate the risk among the farming sector through a comparative index (the "IMBR"), which is derives from a "risk matrix". The main innovation proposed by the MBR Agro is the creation of a machine learning process that streamlines and standardizes the obtainment of results attached to rural risks for different crops and locations, highlighting its vast comparative analysis coverage. Therefore, the MBR Agro's final product, the "IMBR" index, is going to be a credit score for a pre-determined crop and location, gathering information (causes and consequences) of yield and the gross value of production in one final score. Currently there is not an agency or consulting firm specialized in this kind of risk analysis and there is a market niche with potential due to the tendency of growth on the rural insurance and credit markets. For this reason, MBR Agro foresees a wide range of clients, such as insurance companies, banks, brokers, farmers, governments and others. (AU)