WASHINGTON, May 22, 2012— The World Bank and the Netherlands Ministry of Foreign Affairs are launching a US$3 million joint program to reduce farmers’ financial vulnerability to crop and livestock losses.
The Agricultural Insurance Development Program (AIDP) will address key reasons for lackluster agricultural insurance development in developing countries: under-developed risk market infrastructure, lack of reliable data, low domestic technical expertise, and an inadequate legal and regulatory framework.
“This partnership ensures that the Ministry of Foreign Affairs and the World Bank will continue to work together to promote sustainable agricultural risk management in developing countries,” said Jaap Smit, Innovation and Markets Policy Officer in the Ministry.
Through policy advice, technical support and awareness-raising, the program will help developing countries set up sustainable agricultural insurance systems and design and implement agricultural insurance solutions that will ultimately benefit farmers.
“Multiple agricultural insurance pilots, mainly related to index-based crop insurance, have been implemented in developing countries, usually with support from the donor partners. However, very few have been scaled up to be sustainable,” said Olivier Mahul, Program Coordinator of the World Bank’s Disaster Risk Financing and Insurance program. “The AIDP will provide crucial support in achieving that goal.”
The AIDP will initially focus on a few countries in Africa and Asia, with the possibility of expanding to additional countries in the future.
“Agriculture lies at the very heart of global and national food security issues, but it is an inherently risky endeavor," said Marc Sadler, Team Leader of the World Bank’s Agricultural Risk Management Team."While the solutions to most agriculture-related risks lie in traditional mitigation and planning, there remains a vital role for risk transfer products such as insurance, especially for low frequency, high impact events. The AIDP will be a key pillar of the Bank’s ability to develop those opportunities where agricultural insurance can make a real difference.”
The AIDP is part of the broader Swiss-Dutch-World Bank partnership on agricultural risk management.