Insurance and adaptation measures: important options for agricultural risk management

San Jose, Costa Rica, June 25, 2013 (IICA). Agricultural risk management should combine measures for adaptation to climate change with others intended to address the different threats posed to crops, livestock, and farmers’ incomes, such as agricultural insurance.

This is one of the conclusions of the latest technical note shared with the ministers of agriculture of the Americas by the Director General of the Inter-American Institute for Cooperation on Agriculture (IICA), Víctor M. Villalobos.

Mr. Villalobos pointed out that several factors that affect agriculture are being influenced by increased climate variability and climate change, including changes in temperature and precipitation, pests and insects, soil erosion and water quality and quantity, among others. Agriculture is also exposed to another type of threat, which includes markets, tariff barriers and governmental and international trade policies.

In addressing this second type of threat, “the challenge is to ensure that the standards, policies, and institutions that underpin the agricultural sector offer stability, opportunities and security,” the Director General of IICA emphasized.

The Institute recognizes that short-term measures, such as the subsidizing of agricultural insurance premiums, are often adopted in response to climate threats. However, in Latin America and the Caribbean national agricultural insurance programs are still at the embryonic stage and market penetration is relatively low.

“Government support is essential if national insurance programs are to be effective, attainable and sustainable, and small and medium-scale agriculture as well as rural communities are set to implement comprehensive risk management strategies with a long-term vision. But governments cannot, and should not, act alone; public–private partnerships with farmers and insurers must be strengthened,” Villalobos observed.

IICA also urges the countries to adopt more long-term adaptation measures, such as crop rotation, which contributes to better soil and moisture conservation, to generate new sources of income and make more efficient use of water.

“Producers can increase production and reduce risk by changing their farming practices, adopting associated crop, crop rotation and integrated silvopastoral systems, and selecting crops and varieties that adapt better to climate change. Multi-crop farming is also a market strategy for reducing the risks posed by price variations, helping to make farm income much more stable,” the IICA Director General remarked.

Futures markets are a means of pegging the price of a product in order to increase profits, limit losses, and continue to plant the crop the following year. As such, they are also viewed as an agricultural risk management strategy.

The technical note also emphasizes that biotechnology, as an assortment of techniques, can contribute to climate change mitigation and adaptation, thereby reducing uncertainty.

For example, biotechnology techniques make it possible to identify and use genes to produce varieties that are tolerant to water stress. Hence, technology packages based on direct seeding and the use of genetically modified (GM) seeds are now an important tool.

According to A. Massey (Biotecnology Industry Organization) and Clive James (ISAAA), GM crops have contributed to mitigation, making it possible to harvest more on less land, maintaining the integrity of forest areas, reducing the ecological imprint of agriculture by reducing the use of pesticides, fertilizers and tractors, and cutting greenhouse gas emissions.

The Director General of IICA is convinced that a combination of such short and long-term measures makes it possible to deal more efficiently with the different risks faced by agriculture, thus contributing to the sector’s sustainability and profitability.

For more information, contact: 
rafael.trejos@iica.int