Index insurance is a relatively new but innovative approach to insurance provision that pays out benefits on the basis of a pre determined index (e.g. rainfall level) for loss of assets and investments, primarily working capital, resulting from weather and catastrophic events, without requiring the traditional services of insurance claims assessors. It also allows for the claims settlement processes to be quicker and more objective. Before the start of the insurance period, a statistical index is developed measuring deviations from the normal level of parameters such as rainfall, temperature

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.

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.

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.

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.

Losses from climate variability and extreme weather events related to climate have been rising rapidly over the past three decades, and these losses are set to increase even more rapidly with the acceleration of long-term climate change. Efforts to prevent climate change by reducing the emission of greenhouse gasses are underway, of course, but technical, economic and political obstacles mean that we are unlikely to see stable atmospheric concentrations any time soon. In the meantime, more extreme weather can be expected [IPCC (2001)].

This paper examines climate change mitigation and adaptation from an insurance industry perspective, with particular reference to London and the USA. It illustrates how British insurers are increasingly shaping public policy and using new technology to manage the risks from climate change impacts and makes a plea for society to make more use of insurance expertise in future decision making. The industry is a “sleeping giant” much bigger and potentially more powerful than the fossil fuel industry in shaping the future through financial incentives and disincentives. The insurance industry has much to contribute, and increasingly would welcome a greater dialogue with the academic and political community. The paper has a “further reading” section, which includes two recent UN reports which illustrate the need for greater dialogue between experts in the USA and the UK. Hopefully this conference will help to create such a dialogue.

Impact of Climate Change on Crop Production Alexander J.B.Zehnder

“Food as food” is used effectively by the Office of Food for Peace (FFP) and its partners for a variety of food security objectives (prevention of malnutrition, food for education; food for work; general relief, etc). However, agriculture (AG) and natural resources management (NRM) programs thus far remain largely dependent on monetization: tools, seeds, and the salaries of extension officers are paid with cash, not food. Yet, and as discussed below, “food as food” can play a legitimate role in AG programs, and powerfully complement cash-based interventions in this sector.