Platform for Agricultural Risk Management
PARM works to make risk management an integral part of agricultural policy and investment planning.
Insurance - IFAD
Insurance
© IFAD/Isaiah Muthui
Strengthening rural people’s capacity to manage risks, and prepare for and recover from shocks, is essential to eradicating rural poverty
Context
In today’s world of overlapping crises, the need for rural resilience is greater than ever. Strengthening rural people’s capacity to manage risks, and prepare for and recover from shocks, is essential to eradicating rural poverty.
While agricultural and climate risk insurance is widely available in developed countries, there is a huge protection gap in low- and middle-income countries. Ironically, these are the places where agricultural risks are higher and insurance is most needed.
Agricultural and climate risk insurance can protect food systems. Moreover, it can help break the vicious cycle of shock, indebtedness and poverty that holds small-scale producers back.
Insurance enables farmers to build their resilience and invest more in their farms and their products. This is particularly true when used with other tools to manage agricultural risks, like climate-resilient farming practices and farming contracts.
Insurance transfers otherwise unmanageable risks away from farmers, producers and the institutions that serve their communities. In this way, it de-risks investment, stabilizes rural economies and safeguards them against shocks.
Development programmes that include insurance can forge stronger links with the private sector. This, in turn, improves access to insurance, supports agricultural productivity and strengthens food security. Crowding in insurers to development programmes can also help develop sustainable markets and encourage investment in rural areas.
What IFAD does
We integrate insurance into our work with our Insurance for Rural Resilience and Economic Development programme. By bundling insurance with other services, like renewable energy, we create better value and make rural people a less risky investment.
Our Platform for Agricultural Risk Management makes risk management an integral part of agricultural policy and investment planning. It promotes a rigorous and holistic methodology for assessing and managing agricultural risks in developing countries.
Insurance must be combined with education and technical assistance. This is useful for all stakeholders, from small producers to government partners to private sector actors, such as insurance companies. To help achieve this, our Insurance Toolkit supports insurance workstreams and training.
Keep exploring
