Protecting growing prosperity: Agricultural insurance in the developing world
This report (PDF) by ISF Advisors and Syngenta Foundation for Sustainable Agriculture highlights the current status and future development of agricultural insurance for smallholder farmers around the world. In the past ten years, the field of smallholder finance has grown in both size and complexity. Historically, smallholders have had limited access to risk-management options, but increasingly, formalized agricultural insurance is offering them a chance to avoid devastating financial losses and securely invest in their own productive capacity. ISF estimates that globally less than 20% of smallholder farmers currently have agricultural insurance coverage, a number that is less than 3% in sub-Saharan Africa. This coverage gap results from both low demand for and low supply of, agricultural insurance products in developing nations. ISF’s agricultural insurance landscape assessment paints a picture of an industry that shows great potential but is struggling to achieve the required scale and product-level refinements to graduate from the donor funding that has carried it to this point. There are four primary ‘leverage points’ that can accelerate the development of the insurance crucial market: 1) Governments engaged and equipped to drive the agenda. 2) A new step change in product effectiveness. 3) Product linkages that change the distribution and adoption game. 4) Coordinated global action. The authors believe that agricultural insurance for this market likely requires another five to ten years of product, process, and technology innovation to break down complexity and continue to expand the realm of the possible. However, we believe the foundation is now in place to create a more connected, sophisticated, and visionary global agenda. Formal insurance can truly become a shared-value market where millions of smallholder farmers benefit from a multi-sector collaboration that brings the best of our global financial system to bear on some of the most complex development agendas facing our world.