Innovations in risk insurance models

Smallholder farmers face a range of risks related to production, transactions and human resources which often impact on their farming operations as well as their livelihoods. Farm output may vary from season to season because of the vagaries of the weather, especially in countries where agriculture is predominantly rain-fed. Crop production can also be affected by diseases, pests and other natural factors. They face human resource risks associated with death, disease and disability affecting the farmer and his/her family members. They may incur losses as a result of inability to enforce contracts and may themselves be vulnerable to legal risks arising from farm legislations or regulatory standards. Smallholder farmers are also exposed to uncertain access to markets and high price risks which may sometimes occur, or are accentuated by inefficiencies in markets or policy interventions. This policy brief provides an overview of different insurance tools that can be used by farmers to manage risks.