Other Agriculture Study

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  • Publication
    Toward Scaled-Up and Sustainable Agriculture Finance and Insurance in Uganda
    (World Bank, Washington, DC, 2019-08) World Bank
    In March 2018, Uganda's Ministry of Finance, Planning and Economic Development (MoFPED) formally requested technical assistance from the World Bank Group (WBG) to conduct a technical and diagnostic review of the Uganda Agricultural Insurance Scheme (UAIS) with the objective of providing recommendations to enhance the scalability and sustainability of the scheme going forward. This technical report covers the rapid assessment of agriculture finance and its recommendations, the findings of the situation and gap analysis of the UAIS, and where appropriate, presents the WBG’s recommendations for strengthening the scheme; it also includes a proposal for two additional insurance programs, one for crop and one for livestock, targeted at small-scale farmers. Section one is comprised of four chapters that provide important background information: chapter one provides context for the study; chapter two describes the agricultural sector in Uganda, including the constraints and risk exposure faced by small-scale farmers; chapter three offers an overview of the agriculture finance landscape; and chapter four describes past and present agricultural insurance initiatives, including the UAIS. Section two includes the remaining chapters that present findings and make recommendations for scaling up agriculture insurance in Uganda and making programs sustainable. Specifically, chapter five describes in detail the situation and gap analysis carried out for UAIS insurance products, operating systems and procedures, and underwriting results, and it identifies possible ways to strengthen the scheme for the public-private partnership (PPP) stakeholders to consider. Chapter six presents options for the development of large-scale Area Yield Index Insurance (AYII) to complement the existing UAIS crop insurance products and programs, and it includes fiscal costings for GoU to consider. Chapter seven presents options for the development of large-scale Satellite-Based Pasture Drought Index Insurance (SPDII) for open-grazed livestock in semi-arid regions of Uganda, most notably the Karamoja subregion.
  • Publication
    Bangladesh: Agriculture Insurance Situation Analysis
    (World Bank, Washington, DC, 2018) World Bank Group
    Agriculture is key in Bangladesh but highly exposed to risks.The Government provides significant support to agriculture, but currently provides limited support to the development of agriculture insurance.While the Government and external donors spend large amounts of money in the aftermath of disasters – average annual costs of disasters are USD 300 million - the funding gap is still high and can reach more than USD 1.5 billion in bad years.In spite of Government’s efforts, credit to agriculture is still constrained and represents 3 percent of total lending.If agriculture insurance programs were to be developed in Bangladesh, the overall legal, regulatory and supervisory insurance environment would require strengthening.Based on this preliminary assessment and discussions with key stakeholders, the WBG will prepare a technical report and policy briefing for Bangladesh Ministry of Finance’s Bank and Financial Institutions Division (BFID) on four potential types of agricultural insurance programs which have been identified through this situational analysis as priority solutions for further investigation. The four priority areas identified for further investigation are: (1) Livestock insurance for commercial dairy farmers and poultry farmers; (2) Insurance cover for shrimp producers and artisanal fishermen; (3) Crop insurance linked to credit for small and marginal cereal farmers; and (4) Fully subsidized flood-index insurance for the most vulnerable rural households. The diagnostic reports will also analyze potential institutional frameworks that could be considered for agricultural insurance in Bangladesh, paying specific attention to the potential roles for the Government and insurers.
  • Publication
    Developing Parametric Insurance for Weather Related Risks for Indonesia
    (World Bank, Washington, DC, 2018-01) World Bank Group
    Indonesia is one of the main agriculture producers globally and largely relies on domestic staples for its growing population. Projections of climate change models for Indonesia point towards increasing temperatures and more extreme distributions of precipitation with more frequent dry and wet periods. The Government of Indonesia (GoI) has been focusing on modernizing rice production through improved irrigation infrastructure and early warning systems to better cope with developing droughts and support schemes for rice farmers. While governments use risk transfer solutions mostly for infrastructure, parametric insurance covers have become increasingly available for agriculture assets including crops, livestock, and forestry. This study investigates the development of a parametric insurance product as an ex ante risk management instrument that relies on regional drought indices and provides province-level payouts to the GoI in case of severe droughts. As a case study, the province of Central Java has been chosen given its importance in rice production and a recent request of the Central Java Government to transfer drought risk. This study uses over 50 years of historical gridded precipitation and temperature data to develop standard precipitation indices (SPI) and standard precipitation evapotranspiration indices (SPEI) to quantify drought extents at a resolution of 50 x 50 km. Preliminary results of this study have been shown and discussed with the Ministry of Agriculture of Central Java, the National Weather Service of Indonesia (BMKG), the Office of the Insurance Regulator, the Ministry of Finance, and leading Indonesian insurers in the form of workshops undertaken in Indonesia (Semarang and Jakarta) in July 2017. The availability of longer seasonal rice production data will improve the validation of the developed indices.
  • Publication
    Rapid and Integrated Agriculture Risk Management Review for Brazil: Towards an Integrated Vision
    (World Bank, Brasilia, 2017) World Bank
    The agriculture sector of Brazil faces a large number of risks linked to the productive process, which has led to substantial losses to the country in the past years. An adequate and integrated management of those risks can leave farmer incomes less exposed to losses, benefiting the sector and the country as a whole. Therefore, given the always-present resource limitation, it is important to maximize the economic returns of agriculture risk management actions. Brazil built important agriculture risk management policies and programs, but there are several signs that it is possible to improve their efficiency of effectiveness with more coordination and a prioritization in the treatment of gaps and opportunities. The objective of this work was to undertake a rapid and integrated review of agriculture risk management in Brazil, identifying gaps and opportunities for improving current public policies and programs at the federal level in the short and long term. Beyond potential improvements in specific agriculture risk management policies and programs, an improved coordination and integration of current tools can reduce the risk profile of the sector. In this context, the World Bank, Brazilian Agriculture Research Company (Embrapa ) and Ministry of Agriculture, Livestock and Supply (MAPA) put forward a rapid and integrated review of agriculture risk management in Brazil. This rapid review suggests that actions that seek the implementation of an integrated agriculture risk management vision are supported by society at large and by the public sector’s interest. Finally, planning requires the need for a stable institutional framework, which calls for a national plan and an agriculture law, with at least a five-year horizon and that must consider not only the agriculture risk management issues, but also rural development ones.
  • Publication
    Making Climate Finance Work in Agriculture
    (Washington, DC, 2016-06) World Bank
    This discussion paper was produced as a background documentfor the 2016 FAO State of Food and Agriculture (SOFA) report. It was produced through desk research and analysis of existing agricultural and climate finance literature. Moreover, qualitative interviews with key experts representing different stakeholder groups in the agriculture, climate, and financial sectors were conducted to inform the potential opportunities and innovations that should be further explored to make climate finance work for agriculture. Finally, a collection of supporting case studies were provided by different stakeholders to showcase some of the most successful and innovative examples already being implemented in the climate finance community.It is important to note that this is a discussion paper that aims to explore the intersection between climate and agriculture finance by generating dialogue. Hence, the paper explores a relatively new field and proposes innovative interventions that either are being tested or could be tested to increase the leverage of private capital and strengthen the links between financial institutions on the one hand and smallholder farmers and SMEs on the other. The objective of the paper is to generate discussion around this topic and, therefore, no blanket recommendations or descriptive interventions are proposed. A growing population and changing diets are driving up the demand for food. Production is struggling to keep up as crop yields level off in many parts of the world, ocean health declines, and natural resources— including soils, water and biodiversity—are stretched dangerously thin. Climate change is critically interrelated with agriculture. On the one hand, agriculture is extremely vulnerable to climate change. This paper proposes three different avenues to use climate finance to achieve this goal: a) Designing and adapting innovative mechanisms to leverage additional sources of capital, from both public and private sources, that can be directed towards climate smartinvestments in the agriculture sector. b) Identifying entry points for directing climate finance into agriculture and for linking FIs to smallholders and agricultural SMEs, including through capacity building and technical assistance. c) Providing technical assistance to increase investments in agriculture.Finally, this paper presents several suggestions to contribute to the achievement of the ideas presented in this paper, including the need for increased knowledge on innovative financial instruments and mechanisms, bridging information gaps, identifying opportunities, promoting dialogue and cooperation, and designing an action plan to move this agenda forward.