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agricultural insurance

Building resilience against drought: the case of Uganda

Barry Maher's picture



“This can’t be Karamoja,” I thought, looking around me.  I had read the reports, which focus on the vulnerability and poverty of this region in northern Uganda, home to the Karamojong, a nomadic people with their own language, traditions, and customs.  But it’s one thing to read about a place, and quite another to visit it. Karamoja was stunningly beautiful: there were boulders the size of mountains scattered across the horizon, vibrant green bushes and pasture atop red clay earth, and uninterrupted blue skies.  

Recently, I had traveled to Karamoja on a field trip to review the implementation of a government safety net, the Third Northern Uganda Social Action Fund (NUSAF III), which had scaled up in response to the recent drought.  

Uganda’s population is predominantly rural and is limited in its ability to cope with production shocks. The country’s smallholder farmers, and especially the poorest 40% of households, are extremely vulnerable to drought [Uganda poverty study, WB 2016]. Drought response in Uganda has primarily been financed by international donors and delivered through humanitarians and NGOs, with the government playing a coordination role. This ad hoc, reactive approach presents drawbacks, including delayed response. 

Should governments support the development of agricultural insurance markets?

Daniel Clarke's picture



How governments can ensure that low-income farmers are financially protected against natural disasters, such as droughts, was at the heart of a panel discussion at the “Global Index Insurance Conference,” which concluded earlier this week in Paris.
 

Whether weather….and other issues in indexed insurance

This post is part of our Closing the Gap: Financial Inclusion blog series, which shares the views of selected experts and practitioners on different financial inclusion topics.

Crop insurance can improve the lives of farmers, who make up the majority of the world's poor. (Credit: Mukul Soni, Flickr Creative Commons)

How do you insure hundreds of millions of small farmers spread over many developing countries? There is no easy answer. Individual insurance would entail assessing crop yields in millions of farms within the short harvest windows – a virtually impossible task. And even if this were possible, costs would be prohibitive and data quality, a significant issue.

Yet the importance of finding a solution cannot be underestimated. First, farmers make up the majority of the world’s poor. With high dependence on rain-fed cultivation, agriculture is risky. Mitigation of those risks is critical to stabilizing the income of poor farmers. Otherwise, a crop failure could erode savings, lead to inability to service crop loans, push farmers into a vicious debt trap as they are forced to borrow from moneylenders and in extreme cases, lead to starvation or even worse.