The perception of agriculture includes crops, livestock, forestry, fisheries as well as aquaculture. Agriculture provides food and raw materials for growing world inhabitants. Family agriculture, a section that encompasses agriculture of minor productive size, contributes 40% of world food production and also plays an imperative role in the sustainable growth of rural areas and in the food and dietary security of rustic areas.
Agricultural production is exposed to risks of dissimilar origins, such as climatic, geological, health as well as market risks. Internationally between 2005 and 2015 alone, losses from disasters caused by ordinary events amounted to USD 96 billion.
The frequency of incidence and intensity of tremendous climatic events would be increasing as a result of the increase in climatic unpredictability and weather change, thus generating a greater disclosure to the risk of losses To disasters caused by climatic events are added those generated by pests and diseases, it is estimated that yearly crop losses due to pests represent between 20 as well as 40% of the total, while those produce by phytopathogens are estimated at 220 billion USD per year. The variation in the spatio-temporal distribution of pests would be superior due to climatic phenomena, which is generating outbreaks in countries that are not prepared to countenance them.
The section of family agriculture, compared to medium and large-scale agriculture presents greater economic as well as social susceptibility due to its lower capability to absorb unfavorable impacts and to recover livelihoods. Market dynamics plus macroeconomic, communal and institutional factors can also arrange risk scenarios that supply indecision to the income expectations that this section of farmers could gain from their work.
Managing the risk of losses in family agriculture caused by disasters and events of smaller extent play a fundamental position in the development of risk avoidance and alleviation strategies, as well as in preparing for the reply, by promoting the considerable reduction of the unenthusiastic impacts of natural events that influence agriculture and rural livelihoods, as well as the strengthening of food safety.
Within this structure, agricultural insurance constitutes a suitable disaster risk management instrument to cover the remaining risk that cannot be mitigated through avoidance actions and that, due to its enormity, may exceed the aptitude of farmers to incorporate it.
The insurance transfers this outstanding risk to an insurance company or to the State (when the insurance is part of a nationwide public program) with the ability to assume it, allowing reducing the impact of the risk and improving the creative recovery capability, all of which increases pliability. In addition to these benefits, agricultural insurance facilitates admittance to additional financial instruments through which agricultural movement can be promoted, such as credit.
Though, there are restrictions that limit the growth of agricultural insurance in the region of family farming. On the one hand, it is less probable to access the insurance products offered on the market than larger-scale or profitable agriculture. On the other hand, the insurance division does not have the information, or the incentives essential for the development of specific products for family farming, which is distinguished by presenting better helplessness to the threats it faces compared to agriculture.
The State can play a preponderant responsibility in solving several limitations, and features to which particular attention will be devoted in this post. It includes a description of family farming and the types of risks to which it is uncovered, the contribution of agricultural insurance within the structure of an all-inclusive risk management policy, and the contribution of the State to conquer restrictions on the development of farms.
Insurance and advance the access of family producers to this instrument; to this end, a brief explanation of the experiences of Brazil, Chile, Mexico as well as Uruguay is presented. These cases show dissimilar strategies that have been adopted to move the risks faced by this section.
Finally, essential guidelines for the establishment and sustainability of agricultural insurance systems for family farming, are obtainable. It is hoped that this post will be helpful for those who endeavor into risk management issues in agriculture and, in particular, for decision-makers on public policies for complete risk management, and that in this way contributes to humanizing the pliability of family farming in the face of ordinary events. Hope you like our article.
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