Financial institutions still neglect to address agricultural clients. The main reasons for that are their perception that farmers bear higher risks than non-farmers and that their loan products are inadequate to accommodate the needs of agricultural entrepreneurs. As a result, many farmers still lack access to external finance.
Managing risk is an important part of farming and its management is a concern for those governments which include this as one of their agricultural policy objectives. This report presents a framework for the analysis of risk management in agriculture that can be used for the analysis and efficient design of policies in this area.
This report evaluates a number of risk management instruments (RMI), including agricultural insurance, available to farmers to protect them against adverse events. A theoretical framework is described in order to evaluate any RMI in terms of its (initial) goal(s), efficacy and distortions. Subsequently, cases of operational RMIs in different countries (i.e., yield insurance, livestock insurance […]
Recent theoretical and empirical evidence suggests that risk (especially covariant risk that is correlated across producers) may discourage both the supply of agricultural credit and the willingness of small holders to utilize available credit and enjoy the higher expected incomes credit could make available to them.
The purpose of this report is to review common credit risk management techniques used in a sample of Latin American financial institutions with agricultural portfolios, identify the factors that contribute to successful credit risk management as measured by several key financial performance indicators in order to assist donors, governments, and owners of financial institutions to promote and adopt the most efficient and robust techniques.
Agricultural microinsurance in the context of this discussion paper involves the broad question of how low-income farmers close to or below the poverty level can be indemnified for agricultural losses due to severe weather conditions – regardless of the level of the insured (micro: individual; meso: community, farmer association, etc.; macro: national institution, government).
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