A national webinar was held in Cambodia on 31 May to share the findings of an agricultural insurance feasibility study on vegetable and chicken value chains, conducted by the INSURED programme (Insurance for Rural Resilience and Economic Development).
The study highlighted risks and constraints linked to climate change. For vegetables, these include yield losses from pests and diseases linked to excessive rainfall, high humidity and heat waves. For chicken production, the main risks are also pest and disease-related, with heat waves and extreme dry conditions affecting production, mortality and disease. Women producers are very active in both these value chains in Cambodia, with responsibility for specific tasks.
The webinar was held by INSURED in collaboration with the IFAD country programme in Cambodia, and the IFAD-financed Agricultural Services Programme for Innovation, Resilience and Extension (ASPIRE), which is implemented by the Royal Government of Cambodia.
INSURED is IFAD’s technical assistance programme on agricultural and climate risk insurance, which is funded by Sida (the Swedish International Development Cooperation Agency) and implemented by IFAD through the Platform for Agricultural Risk Management (PARM).
Taking the first steps
Feasibility studies are a crucial first step when thinking about agricultural insurance implementation. With a detailed assessment of the current situation, they lay the groundwork for the design and rollout of sustainable, affordable schemes for rural clients, who often have no previous experience of insurance.
IFAD’s work in Cambodia supports smallholders’ transition from subsistence to commercial agriculture and aims to help small producers benefit from agriculture sector growth in export and domestic markets. As in countries across the globe, climate change is a major threat to Cambodia’s agriculture, particularly because most farmers are still dependent on seasonal rainfall, which means that their productivity is limited and unstable. Unprotected climate risks are also a disincentive for farmers to invest in modernized production.
In addition to desk research and interviews with stakeholder representatives, the team conducting the feasibility study carried out focus group discussions with smallholders. Challenges and opportunities in relation to different types of insurance product were identified, including in relation to data, and the distribution of insurance.
Weather index insurance was determined to be a suitable product in the vegetable value chain and to offer some potential in the chicken value chain. The study highlighted the potential to further explore meso-level coverage – for institutions such as microfinance institutions, as well as micro-level product distribution to farmers and their groups.
Reaching the right people
The webinar brought together over 50 stakeholders. They represented a wide range of public and private sector entities, many of whom had been interviewed for the study, including government, the insurance regulator, insurers, reinsurers, banks, MFIs, NGOs, agribusinesses and microfinance associations.
His Excellency, Dr Meas Pyseth, Under Secretary of State at MAFF and Director of ASPIRE, took part in the webinar and noted the importance of working together.
“Cooperation between a wide range of stakeholders is key to developing agricultural insurance, from producers to public and private sectors, and up to national level policy level,” he said. “So we are pleased the see the variety of institutions here today.”
Insurance builds resilience
Inclusive agricultural insurance schemes play a valuable role in building resilience for small producers. Smallholders and businesses that are protected by insurance are able to recover more quickly from shocks such as floods, drought or disease.
Agricultural and climate risk insurance is often sold packaged with other financial and agricultural services and can also unlock credit that enables poor rural people to invest in their businesses and increases household income.
While insurance is no magic bullet, in the high-risk sector of smallholder agriculture it can play a key role in a holistic approach to risk mitigation and management. For Cambodia, other elements of such an approach can include improved agronomic techniques, access to finance for equipment like net houses or green houses, and better access to information such as weather forecasts and market prices. The webinar discussed the potential to develop nationwide networks of business clusters around value chains such as vegetables and poultry, and to use digital platforms to improve provision of information.
For more information on the feasibility study, contact: [email protected]
The Insurance Toolkit provides technical tools and knowledge briefs to give project designers and implementers practical guidance on agricultural and climate risk insurance. It includes Model terms of reference for Agricultural and climate risk insurance feasibility studies.