The frequency and severity of agricultural risks continue to rise, particularly insecurity risk. Risks such as droughts, floods, tropical cyclones, pandemics as well as exchange rate and price volatility of commodities are increasingly putting a drain on developing countries’ economies.This situation hampers the good development momentum that a number of developing countries recorded in the recent decades. The Covid-19 pandemic however wiped out a large part of the growth and shows the link between different risks (i.e. health and economic risk) and thus the importance of a holistic approach to risk management.
To tackle agricultural risks, the G20 established the Platform for Agricultural Risk Management (PARM) to provide technical support to developing country governments to integrate agricultural risk management into policies, institutional capacities and investments, in order to move from a culture of disaster adaptation to smart risk management.
Women are also especially vulnerable to agricultural and climate risk; risk data as well as tools to manage risk need to be read with a gender lens. In the recently released analytics backed by a rigorous scientific methodology and a holistic approach, PARM brought up that in Burkina Faso insecurity would generate a loss to the agricultural sector equivalent to $170 million on average per year.
In comparison, climate risks are causing $100 million losses annually. In Ethiopia, for instance, drought risks could generate losses of over $ 900 million in the worst-case scenario. PARM is also implementing the INSURED programme (Insurance for Rural Resilience and Economic Development). The unique advantage of insurance as a tool is that it can transfer otherwise unmanageable risks away from farmers, businesses and countries. When used with other tools and techniques as part of a holistic approach to agricultural risk management, insurance can set in motion a virtuous cycle that enables farming families to produce, earn and invest more, building their assets and resilience.
INSURED is a US$6 million programme funded by SIDA (the Swedish International Development Cooperation Agency). Its goal is threefold: to build the resilience of poor rural households, increase their capacity to manage risk, and strengthen their livelihoods. PARM adopts a holistic approach to Agricultural Risk Management (ARM) that addresses multiple risks (climate, market, social risk etc) at different level (farmers, producer’s organisations, country) and that integrates gender and youth at every stage of the cycle.
PARM and INSURED programme will share some insights during a session on 23 June 2022 at IFAD 2022 Jobs, Innovation and Value Chains in the age of Climate Change Conference. This session aims at presenting and discussing the PARM/INSURED approach to Agricultural Risk Management (ARM), with the participation of CIRAD (Agricultural Research Centre for International Development) and the Director General for Sectoral Studies and Statistics of the Ministry of Agriculture, Livestock and Fisheries of Burkina Faso.
The session will present the three pillars of ARM according to the PARM process: (i) an in-depth assessment of the risks; (ii) the development of capacities to manage risks; and (iii) the tools available to address risks.
The PARM process is carried out in co-production with the governments of the countries where PARM operates. The process is validated through participatory and iterative workshops with local and international agriculture stakeholders to turn risks into opportunities. PARM therefore also assists countries to kick -start a systemic and holistic approach to ARM.