Can agricultural insurance help ensure post-pandemic food security?


IN a world where radical climatic events are increasingly affecting agricultural production, agricultural insurance is emerging as a key solution for producers to strengthen economic and food security.

The global agricultural industry has suffered greatly from Covid-19. Lockdown measures implemented to stop the spread of the virus have resulted in severe labor shortages, with crops often left to rot in the fields, while disruptions to local and international supply chains have meant that many products just never hit the market.

While these factors have put considerable pressure on the world’s food supply, a series of natural disasters have exacerbated the problem.

For example, parts of Africa, the Middle East and Asia experienced the worst locust infestation in decades, decimating yields and leading to crop and livestock losses of US $ 8.5 billion. than in East Africa.

This subsequently put pressure not only on small agricultural businesses, but also on local food supplies.

The origins of the infestation date back to mid-2018, when Cyclone Mekunu swept through large desert areas at the southern end of the Gulf Peninsula and parts of East Africa.

After a severe drought – which itself devastated agricultural production in a number of African countries – the heavy rains associated with the cyclone created the perfect breeding ground for locusts to grow and spread, further highlighting the side effects of weather events. extremes.

Implementation of agricultural insurance

As extreme weather conditions are expected to develop steadily, agricultural insurance is increasingly seen as an effective tool to protect farmers from financial losses related to harvests, offset budget volatility related to agriculture and stimulate growth of the sector – especially in emerging markets where agriculture accounts for a significant share of GDP.

For example, in sub-Saharan Africa, agriculture accounts for 14% of GDP and export crops are a major source of foreign exchange, while the sector is the largest employer in the entire continent, meaning that all Serious crop disruption could have adverse effects on large swathes of society.

Despite its importance, the considerable risk associated with catastrophic farm losses has led many insurers to hesitate to offer agricultural insurance products in emerging markets.

In light of this, in some cases state authorities have stepped in to help implement broad-based insurance schemes.

For example, a public-private program launched in the state of Gujarat in India saw the government subsidize agricultural insurance among small and medium-sized farms.

The increased security resulting from the agreement has helped increase credit flows to farmers, both in terms of coverage and size, from 19 to 27 percent of the credit portfolio.

Meanwhile, in 2018, the Kenyan government implemented the National Disaster Risk Financing Strategy, which included an initiative to place agricultural insurance with high-quality inputs and be sold to farmers as a package. .

Farmers receive insurance payments via mobile money, which not only speeds up the speed of support, but also helps facilitate financial inclusion for those without a bank account. It is estimated that more than half a million farmers are now participating in the program.

Given the huge tax support offered to governments, businesses and citizens during the pandemic, supporters argue that helping to create or expand agricultural insurance could provide a stable platform. for post-pandemic economic growth in many emerging markets.

Strengthen food security

Many believe that increased insurance coverage could also play a key role in boosting food security after Covid-19.

At the end of last year, the United Nations World Food Program estimated that the number of people facing acute food insecurity had increased by 82% during 2020, to reach 270 million.

The most dramatic effects have been felt in emerging markets, with the United Nations citing South Sudan, Yemen and northern Nigeria as areas most at risk of dangerously high food insecurity.

The challenges sparked a series of intergovernmental responses to address the problem, however, with regional solutions developed to facilitate the flow of essential supplies.

For example, in April last year, the GCC established an integrated food security network, developed a strategic food reserve and made significant investments in local agriculture.

Elsewhere, the pandemic has accelerated the adoption of various measures associated with the African Continental Free Trade Area, including measures to establish more efficient and agile regional supply chains, while in Latin America, a declaration was signed by 26 countries expressing their commitment to safeguard the agricultural sector in the region.

This piece was produced by the Oxford Business Group.









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