Lusaka: Alliance for Commodity Trade in Eastern and Southern Africa (ACTESA) has advised member countries to design agricultural risk management mechanisms to support and improve increased agricultural insurance coverage to mitigate dangers from accidents and natural disasters. And ACTESA chief executive officer Cris Muyunda has challenged suppliers of seeds and fertilizers to consider sharing the risk by providing insurance to farmers who buy their products.
During the Africa Agricultural Markets Program (AAMP) policy seminar on ‘Risk management in Africa’s Agriculture: Taking stock of what has and has not worked’ on Monday, Dr Muyunda said agricultural risk management was about developing a strategy to avoid, reduce, accept and share risks through setting priorities and allocating resources accordingly.
Dr Muyunda mentioned that perils that needed to be managed included fire, lightning, frost, excessive rain, droughts, uncontrollable crop diseases and pests. He said risks in the agriculture sector were enormous due to slow progress in irrigation and improvement in agriculture.
'Agricultural supplies and prices continue to fluctuate greatly causing economic and social dislocation, distressed families and communities thus public support is required if agricultural risks are to be managed successfully,' Dr Muyunda said. 'Global experience shows that given the special nature of agriculture, governments can either subsidize the premiums farmers pay or lay the foundation for emergence of insurance markets because public support benefits not only the actors but the entire economy through backward and forward linkages with the rest of the economy so to rationalize public expenditure and to be development effective, there is need for renewed public-private efforts to design appropriate risk management mechanisms and provide support to increase insurance coverage and improve viability of risk management schemes.'
He noted that co-existence of public-private agricultural insurance had remained a challenge. 'The private sector cannot compete with government, therefore an alternative is to establish partnerships and instead of the traditional minimum guaranteed prices which farmers receive from government, a market based insurance cover can guarantee market prices with government sharing the burden of the premium,' said Dr Muyunda.
'Governments’ role also includes providing information on weather patterns and incidence and history of perils and governments can also cover the cost of the initial research before any risk management program is designed and input suppliers (seeds, fertilizers) need to consider providing insurance to farmers who buy their products in order to share risks in a manner that increases economic efficiency.'
Officially opening the seminar, Malawian agriculture minister Peter Mwanza said agricultural sectors of the region were facing many threats. 'Any event that may endanger achievement of any objective can be considered a risk and threats to our agricultural sector are numerous and originate from uncertainty in financial markets, project failures, accidents, legal liabilities, natural causes and disasters,' said Prof Mwanza.