Enabling Productive but Asset-Poor Farmers to Succeed : A Risk Financing Framework

This paper examines how market-based risk financing instruments could enable asset-poor but productive farmers exposed to production shocks to engage in riskier but higher-return agricultural activities. The financing of these exogenous shocks is a...

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Main Authors:	Gurenko, Eugene, Mahul, Olivier
Format:	Policy Research Working Paper
Language:	English en_US
Published:	World Bank, Washington, D.C. 2013
Subjects:	RISK MANAGEMENT AGRICULTURAL INSURANCE FARM INCOME CROP INSURANCE FINANCIAL INSTRUMENTS AGRICULTURAL ECONOMICS AGRICULTURAL MANAGEMENT POVERTY FARMERS FOOD & AGRICULTURE ORGANISATION ACTUARIAL SCIENCE ADVERSE SELECTION AGRICULTURAL ACTIVITIES AGRICULTURAL BUSINESS AGRICULTURAL PRODUCTION AGRICULTURE ANALYTICAL APPROACH AVERAGE YIELDS BANANAS CAPITAL MARKETS CAPITAL REQUIREMENTS CATASTROPHE COVERAGE CATASTROPHES CATASTROPHIC RISKS CDF COCOA COMMODITY CONCEPTUAL FRAMEWORK CONTRACTUAL SAVINGS COVERAGE CREDIT CROP CROP ROTATION CROP YIELD CROP YIELDS CROPS DEBT DEFORESTATION DISASTERS ECONOMIC CONSEQUENCES EXCHANGE RATES EXPECTED RETURN FAO FARM FARMER FARMING FARMS FEASIBILITY STUDIES FERTILIZERS FINANCIAL PERFORMANCE FINANCIAL RISK FINANCIAL SECTOR FINANCIAL STRUCTURE GOVERNMENT INTERVENTION GOVERNMENT SUBSIDIES HERBICIDES INCOME INSURABILITY INSURANCE INSURANCE COMPANIES INSURANCE MARKETS INSURANCE PREMIUMS INSURANCE PRODUCTS INSURERS INTEREST RATE INTEREST RATES LIQUID ASSETS LIQUIDITY MARGINAL PRODUCTIVITY MARKET RISK MORAL HAZARD OPERATING LOSSES POLLUTION POOR FARMERS PRICE RISK PRODUCERS PRODUCTION COSTS PRODUCTIVITY PROFIT MARGIN PROFITABILITY PROGRAMS REINSURANCE RESERVES RISK MANAGEMENT POLICIES RISK TRANSFER SAVINGS SOCIAL SAFETY NETS SYSTEMIC RISK TRANSACTION COSTS VALUE ADDED WEALTH
Online Access:	http://documents.worldbank.org/curated/en/2004/02/3916582/enabling-productive-asset-poor-farmers-succeed-risk-financing-framework http://hdl.handle.net/10986/14743

id	okr-10986-14743
recordtype	oai_dc
spelling	okr-10986-147432021-04-23T14:03:20Z Enabling Productive but Asset-Poor Farmers to Succeed : A Risk Financing Framework Gurenko, Eugene Mahul, Olivier RISK MANAGEMENT AGRICULTURAL INSURANCE FARM INCOME CROP INSURANCE FINANCIAL INSTRUMENTS AGRICULTURAL ECONOMICS AGRICULTURAL MANAGEMENT POVERTY FARMERS FOOD & AGRICULTURE ORGANISATION ACTUARIAL SCIENCE ADVERSE SELECTION AGRICULTURAL ACTIVITIES AGRICULTURAL BUSINESS AGRICULTURAL INSURANCE AGRICULTURAL PRODUCTION AGRICULTURE ANALYTICAL APPROACH AVERAGE YIELDS BANANAS CAPITAL MARKETS CAPITAL REQUIREMENTS CATASTROPHE COVERAGE CATASTROPHES CATASTROPHIC RISKS CDF COCOA COMMODITY CONCEPTUAL FRAMEWORK CONTRACTUAL SAVINGS COVERAGE CREDIT CROP CROP INSURANCE CROP ROTATION CROP YIELD CROP YIELDS CROPS DEBT DEFORESTATION DISASTERS ECONOMIC CONSEQUENCES EXCHANGE RATES EXPECTED RETURN FAO FARM FARM INCOME FARMER FARMING FARMS FEASIBILITY STUDIES FERTILIZERS FINANCIAL PERFORMANCE FINANCIAL RISK FINANCIAL SECTOR FINANCIAL STRUCTURE GOVERNMENT INTERVENTION GOVERNMENT SUBSIDIES HERBICIDES INCOME INSURABILITY INSURANCE INSURANCE INSURANCE COMPANIES INSURANCE MARKETS INSURANCE PREMIUMS INSURANCE PRODUCTS INSURERS INTEREST RATE INTEREST RATES LIQUID ASSETS LIQUIDITY MARGINAL PRODUCTIVITY MARKET RISK MORAL HAZARD OPERATING LOSSES POLLUTION POOR FARMERS PRICE RISK PRODUCERS PRODUCTION COSTS PRODUCTIVITY PROFIT MARGIN PROFITABILITY PROGRAMS REINSURANCE RESERVES RISK MANAGEMENT RISK MANAGEMENT POLICIES RISK TRANSFER SAVINGS SOCIAL SAFETY NETS SYSTEMIC RISK TRANSACTION COSTS VALUE ADDED WEALTH This paper examines how market-based risk financing instruments could enable asset-poor but productive farmers exposed to production shocks to engage in riskier but higher-return agricultural activities. The financing of these exogenous shocks is addressed in a conceptual framework based on an optimal allocation of capital where the farm is viewed as a business unit. The approach allows for (1) testing the business viability of a specified crop by assessing the minimum business capital required to ensure the continuity of the business after the occurrence of an adverse production shock; and (2) designing an optimal risk financing program to finance the minimum capital requirements using a combination of instruments (insurance, savings, and borrowing). The authors provide numerical and graphical examples to illustrate the relevance of this financial approach to the specific issues of agricultural risk management. 2013-08-01T19:23:23Z 2013-08-01T19:23:23Z 2004-02 http://documents.worldbank.org/curated/en/2004/02/3916582/enabling-productive-asset-poor-farmers-succeed-risk-financing-framework http://hdl.handle.net/10986/14743 English en_US Policy Research Working Paper;No.3211 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank World Bank, Washington, D.C. Publications & Research :: Policy Research Working Paper Publications & Research
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English en_US
topic	RISK MANAGEMENT AGRICULTURAL INSURANCE FARM INCOME CROP INSURANCE FINANCIAL INSTRUMENTS AGRICULTURAL ECONOMICS AGRICULTURAL MANAGEMENT POVERTY FARMERS FOOD & AGRICULTURE ORGANISATION ACTUARIAL SCIENCE ADVERSE SELECTION AGRICULTURAL ACTIVITIES AGRICULTURAL BUSINESS AGRICULTURAL INSURANCE AGRICULTURAL PRODUCTION AGRICULTURE ANALYTICAL APPROACH AVERAGE YIELDS BANANAS CAPITAL MARKETS CAPITAL REQUIREMENTS CATASTROPHE COVERAGE CATASTROPHES CATASTROPHIC RISKS CDF COCOA COMMODITY CONCEPTUAL FRAMEWORK CONTRACTUAL SAVINGS COVERAGE CREDIT CROP CROP INSURANCE CROP ROTATION CROP YIELD CROP YIELDS CROPS DEBT DEFORESTATION DISASTERS ECONOMIC CONSEQUENCES EXCHANGE RATES EXPECTED RETURN FAO FARM FARM INCOME FARMER FARMING FARMS FEASIBILITY STUDIES FERTILIZERS FINANCIAL PERFORMANCE FINANCIAL RISK FINANCIAL SECTOR FINANCIAL STRUCTURE GOVERNMENT INTERVENTION GOVERNMENT SUBSIDIES HERBICIDES INCOME INSURABILITY INSURANCE INSURANCE INSURANCE COMPANIES INSURANCE MARKETS INSURANCE PREMIUMS INSURANCE PRODUCTS INSURERS INTEREST RATE INTEREST RATES LIQUID ASSETS LIQUIDITY MARGINAL PRODUCTIVITY MARKET RISK MORAL HAZARD OPERATING LOSSES POLLUTION POOR FARMERS PRICE RISK PRODUCERS PRODUCTION COSTS PRODUCTIVITY PROFIT MARGIN PROFITABILITY PROGRAMS REINSURANCE RESERVES RISK MANAGEMENT RISK MANAGEMENT POLICIES RISK TRANSFER SAVINGS SOCIAL SAFETY NETS SYSTEMIC RISK TRANSACTION COSTS VALUE ADDED WEALTH
spellingShingle	RISK MANAGEMENT AGRICULTURAL INSURANCE FARM INCOME CROP INSURANCE FINANCIAL INSTRUMENTS AGRICULTURAL ECONOMICS AGRICULTURAL MANAGEMENT POVERTY FARMERS FOOD & AGRICULTURE ORGANISATION ACTUARIAL SCIENCE ADVERSE SELECTION AGRICULTURAL ACTIVITIES AGRICULTURAL BUSINESS AGRICULTURAL INSURANCE AGRICULTURAL PRODUCTION AGRICULTURE ANALYTICAL APPROACH AVERAGE YIELDS BANANAS CAPITAL MARKETS CAPITAL REQUIREMENTS CATASTROPHE COVERAGE CATASTROPHES CATASTROPHIC RISKS CDF COCOA COMMODITY CONCEPTUAL FRAMEWORK CONTRACTUAL SAVINGS COVERAGE CREDIT CROP CROP INSURANCE CROP ROTATION CROP YIELD CROP YIELDS CROPS DEBT DEFORESTATION DISASTERS ECONOMIC CONSEQUENCES EXCHANGE RATES EXPECTED RETURN FAO FARM FARM INCOME FARMER FARMING FARMS FEASIBILITY STUDIES FERTILIZERS FINANCIAL PERFORMANCE FINANCIAL RISK FINANCIAL SECTOR FINANCIAL STRUCTURE GOVERNMENT INTERVENTION GOVERNMENT SUBSIDIES HERBICIDES INCOME INSURABILITY INSURANCE INSURANCE INSURANCE COMPANIES INSURANCE MARKETS INSURANCE PREMIUMS INSURANCE PRODUCTS INSURERS INTEREST RATE INTEREST RATES LIQUID ASSETS LIQUIDITY MARGINAL PRODUCTIVITY MARKET RISK MORAL HAZARD OPERATING LOSSES POLLUTION POOR FARMERS PRICE RISK PRODUCERS PRODUCTION COSTS PRODUCTIVITY PROFIT MARGIN PROFITABILITY PROGRAMS REINSURANCE RESERVES RISK MANAGEMENT RISK MANAGEMENT POLICIES RISK TRANSFER SAVINGS SOCIAL SAFETY NETS SYSTEMIC RISK TRANSACTION COSTS VALUE ADDED WEALTH Gurenko, Eugene Mahul, Olivier Enabling Productive but Asset-Poor Farmers to Succeed : A Risk Financing Framework
relation	Policy Research Working Paper;No.3211
description	This paper examines how market-based risk financing instruments could enable asset-poor but productive farmers exposed to production shocks to engage in riskier but higher-return agricultural activities. The financing of these exogenous shocks is addressed in a conceptual framework based on an optimal allocation of capital where the farm is viewed as a business unit. The approach allows for (1) testing the business viability of a specified crop by assessing the minimum business capital required to ensure the continuity of the business after the occurrence of an adverse production shock; and (2) designing an optimal risk financing program to finance the minimum capital requirements using a combination of instruments (insurance, savings, and borrowing). The authors provide numerical and graphical examples to illustrate the relevance of this financial approach to the specific issues of agricultural risk management.
format	Publications & Research :: Policy Research Working Paper
author	Gurenko, Eugene Mahul, Olivier
author_facet	Gurenko, Eugene Mahul, Olivier
author_sort	Gurenko, Eugene
title	Enabling Productive but Asset-Poor Farmers to Succeed : A Risk Financing Framework
title_short	Enabling Productive but Asset-Poor Farmers to Succeed : A Risk Financing Framework
title_full	Enabling Productive but Asset-Poor Farmers to Succeed : A Risk Financing Framework
title_fullStr	Enabling Productive but Asset-Poor Farmers to Succeed : A Risk Financing Framework
title_full_unstemmed	Enabling Productive but Asset-Poor Farmers to Succeed : A Risk Financing Framework
title_sort	enabling productive but asset-poor farmers to succeed : a risk financing framework
publisher	World Bank, Washington, D.C.
publishDate	2013
url	http://documents.worldbank.org/curated/en/2004/02/3916582/enabling-productive-asset-poor-farmers-succeed-risk-financing-framework http://hdl.handle.net/10986/14743
_version_	1764430333728522240

Enabling Productive but Asset-Poor Farmers to Succeed : A Risk Financing Framework

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