Under Mexico’s G20 Presidency, Vice Ministers/Deputies of Agriculture from the countries of the G20, and invited countries1 (the “G20 Agriculture Group”) met in Mexico City with the aim of articulating goals, focusing efforts and establishing sound commitments to address food security challenges under a global perspective.

Fifty-five year old Niyitegeka Veneranda lives in rural Rwanda. She and her husband are parents to seven children and grandparents to five. They farm less than a hectare of their own land, yet she has been able to build a small house, feed her family, and send her last three children to school. She expanded her rice production recently with a loan from a local bank made possible through agricultural insurance, and plans to expand her acreage with another loan next year.

This Masters thesis presents the results of a pilot scale study on weather index-based rice insurance in Zhejiang province, China. The goal of this thesis is to find the best suited weather index-based rice insurance model for each rice cropping zone of Zhejiang. By testing a wide range of weather indexes for their relationship with the rice yield per unit land in each rice cropping zone using classic regression models, a set of weather indexes were selected for each rice cropping zone of Zhejiang. A rice insurance product was then designed based on the relationship between the chosen weather index and rice yield. Basis risks were studied in detail in this thesis, and were reduced in the insurance model by defining the insurable farming scale to rice cropping zone and by removing the time trend in rice yields. The results show diversified features in weather index and insurance product design of different rice cropping zones in Zhejiang.

This paper presents preliminary results on the possible demand for weather insurance in China. Results from 1,564 farm households from Western and Central China between October 2007 and October 2008 suggest that the greater risk for farmers is drought followed by excessive rain. Heat is less critical as a risk but more significant than cool weather. Results suggest a strong interest in precipitation insurance with 50% and 44% of respondents indicating strong interest in the product. Supplementary results indicate that interest is equal between planting, cultivating, and harvesting. Furthermore results suggest that farmers are willing to adopt new ideas, and where possible already take action to self insure through diversification and other means, The results are encouraging. Examples and discussion of how weather insurance can be implemented is included in the text.

Long-term crop insurance is operated across more than 200 million hectares of agricultural land around the world. For more than 35 years, valuable experience has been gathered on this crop insurance system. Munich Re has filtered out the characteristics of the system which are responsible for its longterm success and defined them as a 'best practice' for crop insurance: SystemAgro: The framework is provided by a public private partnership designed on insurance principles. All insurance-related conditions which are important for securing the growing of agricultural crops are governed by laws and regulations. These are, for example: access to insurance, covering the insurance requirement at reasonable premiums or transparency of insurance conditions and claims handling.

Agricultural insurance plays an important role in stabilising farmers’ income and stimulating investment in agriculture. The market for these products has taken off since the Chinese government began to subsidise premiums. Challenges remain, however, and reinsurance can help support the industry with know-how and capacity.

Policymakers in Indonesia are considering how to ensure greater food security, boost incomes of farmers and rural communities, and expand agricultural production to meet rising food demand from an increasingly urban population. The Indonesia Chamber of Commerce and Industry, KADIN, is taking a leadership role in the national discussion on agricultural policy. Agricultural finance is a critical element in this discussion, and KADIN has requested USAID’s SEADI Project to prepare an analysis of the situation related to key commodity value chains, including rice, corn, and beef cattle, as well as a review of global trends in agricultural finance. This report responds to KADIN’s call for fresh analysis and recommendations on how to improve agricultural finance in Indonesia. In light of recent dramatic food price hikes, and before the convening of the PISAgro working group on agricultural finance, the report arrives at an important point in time.

Basis Risk in Index insurance By: Kollin Rao

Food prices for wheat, maize, corn or soybeans have risen in the last 18 months markedly, mainly as a result of a growing imbalance between supply and demand for agricultural products. Since 2000, prices for food have nearly doubled around the world. The supply side is not keeping up with the increase in demand. Direct investments into agriculture production are still remarkably low. This issue is being addressed at both the national and international level. For example, within the Commonwealth, Ministers of Finance, at their Annual Meeting in October 2008, called on the international community to intensify its support for affected countries and to accelerate both short and longer term investments in increasing agricultural production and productivity.

Food prices for wheat, maize, corn or soybeans have risen in the last 18 months markedly, mainly as a result of a growing imbalance between supply and demand for agricultural products. Since 2000, prices for food have nearly doubled around the world. The supply side is not keeping up with the increase in demand. Direct investments into agriculture production are still remarkably low. This issue is being addressed at both the national and international level. For example, within the Commonwealth, Ministers of Finance, at their Annual Meeting in October 2008, called on the international community to intensify its support for affected countries and to accelerate both short and longer term investments in increasing agricultural production and productivity.