Risk management in African agriculture

<p>'Accessible systems to manage risk in family agriculture in Africa', or 'Farm Risk Management for Africa' (FARMAF) is a project implemented by national and regional farmers organisations in Africa in partnership with Agrinatura-EEIG. The objective is to improve food security and livelihoods of smallholder farmers through enhanced access to tools and methods to manage farm risks. FARMAF is implemented in Burkina Faso, Tanzania and Zambia, with the aim that lessons learned can be transferred to other countires. FARMAF is funded by the European Union and is runs from 2012-2015.</p> <p>Wageningen UR as partner of Agrinatura-EEIG provides expertise to FARMAF in the following specific areas: (i) crop insurance and collective action) and (ii) monitoring and evaluation for learning lessons on risk management tools.</p> <p> </p>

In addition, farmers may not benefit from access to output markets because they are exposed to high volatility in prices. Smallholder farmers in Africa often lack access to reliable and timely market information, thereby weakening their bargaining position. Uncertainty about marketing of significant surpluses tends to discourage farmers from adopting high return options such as improved farm technology, thus failing to reach higher productivity.

The perception that the farm sector is highly risky makes it unattractive to financial intermediaries, thereby reducing private investment flows to the sector. Livelihoods in entire rural communities as well as poor urban households can also be jeopardised as a consequence of these risks.

‘Risk management in African agriculture‘  focuses on how smallholder farmers in Africa can access and use effective farm risk management tools. Many of these tools are in the pilot stage and research is needed to know which tool works best when, where and under which circumstances. To test this, this KB project is developing a monitoring and evaluation system to assess the impact of interventions (deliverable 4.4.).

The KB project links with ongoing activities in Africa (Zambia, Burkina Faso and Tanzania) implemented in the projects FARMAF and Transaction Risks:

Warehouse receipt systems (WRS)

Activities will be implemented by national producers organisations (ZNFU, CPF and MVIWATA) and other stakeholders to improve the existing warehouse receipt systems. Also work will be done on improving the enabling legal framework and to support stable agricultural trade policies.

Weather index based insurance (WIBI)

In this activity we collaborate with insurance companies involved in crop insurance. The insurance companies, with ZNFU and CPF aim to broaden access to insurance for smallholder farmers. Lessons learned in Zambia will also be useful in replicating this action in Burkina Faso and in the future in Tanzania. This activity will specifically promote linkage between provision of agricultural insurance and inputs credit to smallholder farmers.

Market information systems (MIS)

This activity will review the lessons learned with the various market information systems that are provided by ZNFU, CPF and MVIWATA to provide farmers with up-to-date price information.

Commodity exchange in Ethiopia (ECX)

The ECX has become mandatory for export crops in 2010. This activity will review the effect of the ECX on traders and smallholder sesame farmers.