Protecting smallholder farmers against weather-related risks 

Smallholder farming provides a key part of people’s income, national GDPs, and global food supply, accounting for 80 percent of the world’s 500 million farms. 

 Vulnerability to climate-related shocks is a constant threat to their food security, income and well-being. Climate change will only exacerbate this vulnerability with more frequent and intense climate hazards, such as floods and droughts.

These risks are further compounded by a lack of capacity to manage them. A lack of natural resources, quality inputs and technology, transport and storage, connection to markets, and financial services, make smallholders particularly vulnerable to crop yield gaps and losses,  jeopardizing their ability to advance beyond the poverty line towards greater prosperity and food security. Strategies for reducing and mitigating risks are therefore essential to overcoming hunger, achieving food security and enhancing resilience.

The Weather Risk Management Facility (WRMF)

The Weather Risk Management Facility (WRMF) is a joint initiative by the World Food Programme (WFP) and the International Fund for Agricultural Development (IFAD) established in 2008 to reduce smallholders’ vulnerability to weather and other risks that limit agricultural production. It aims to encourage and protect investments in smallholder agricultural production, and enhance food security. 

WRMF Activities 

•    High quality operational research  
•    Capacity building in weather risk management for food security and agriculture
•    Implementing initiatives for innovative risk management solutions, such as agricultural index insurance (including weather, and remotely-sensed indexes). These solutions can be mainstreamed within WFP’s and IFAD’s programmes, as well as those of other partners, for an integrated resilience building approach to climate disasters and change.

The Need for Access To Insurance

Insurance is a crucial element to agricultural development and risk management in developing countries, yet it is precisely here, that insurance is hardest to access, especially for the most vulnerable farmers. The Weather Risk Management Facility has been a leader in examining the applicability of insurance to address the risks faced by smallholder farmers, especially innovative index insurance tools.

Index Insurance- How it works

Under an index-based insurance scheme, yield or livestock losses resulting from different risks are assigned values on a pre-defined basis, using an index. Agricultural index insurance for smallholders can protect them from shocks and provide an incentive to invest in their farm without risking losing their agricultural inputs. 

Index Insurance has, so far, been the major focus of WRMF’s activities, proving to be more accessible to smallholder farmers than traditional indemnity-based agricultural insurance where policies have to be priced and pay-outs assessed in the field. 

With index insurance, every farmer is subject to the same policy within a defined area, and pay-outs are calculated based on a pre-defined index. The WRMF advocates a responsible attitude to index insurance, recognizing that it is not panacea, and working to improve product offerings and delivery for greater scalability and sustainability.