Risk management in African agriculture

African farmers are mainly smallholder farmers, with average farm size of 1-2 hectares. They tend to be severely constrained in investing in productivity-enhancing technology because of limited household resources and lack of access to finance, which in turn can be attributed in part to the risks smallholder farmers in Africa face. Farm risks are prevalent at every stage of the agricultural value chain – from input acquisition to post-harvest storage, processing and marketing.

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.

The main problem addressed is how smallholder farmers in Africa can access and use effective farm risk management tools. The objective of this project is to improve household food security and livelihoods of the rural poor in Africa through better access to risk management tools.

Beoogd resultaat

Risk management tools for small-holder farmers are of great importance to the development of the agricultural sector, and for economic development in general. When farmers can successfully reduce risks, they can focus on more income-generating activities such as cash-crops. This not only increases farm household incomes, but enables the agricultural sector to grow as well.

In the donor community there is much demand for risk management tools that are easily accessible and ready to be used by farmers. This project will test which tools are indeed useful to farmers, and which (policy, institutional) bottlenecks need to be removed for small-holder farmer to access risk management tools.
This is also an area in which public-private partnerships are developing: between NGO's, donors and governements on the one side and insurance firms and financial institutions on the other side.


    •    Review of commodity exchange in Ethiopia as institutional arrangement to reduce price risks of small-holder farmers
    •    Review of feasibility of warehouse receipt systems in Zambia
    •    Review of feasibility of weather index based insurance in Zambia
    •    Strengthening ZNFU and primary-level farmers’ organisations