Integrated financial management of climate risks in the agricultural sector in Peru
As of: October 2020
Objective and activities
The project advises the Peruvian Ministry of Agriculture (MINAGRI) on establishing a risk-transfer system with the backing of both the state and the private sector. The system will improve food security, enhance economic stability in rural areas and help the agricultural sector to better cope with climate change. The private and public financial services offered through the system will enable agricultural producers to reduce their vulnerability to weather extremes - which are exacerbated by climate change - and to limit their exposure to the associated risks. The project is supporting the development of an information system and strengthening the expertise required for the management and government supervision of risk transfer systems in Peru.
State of implementation/results
- The project significantly contributed to the development of a risk transfer system with agri-insurances for smallholder farmers in Peru - Between 2014-2018, the insured area increased by 92%, which is about 1/3 of the total area - 290,000 smallholder farmers in 8 regions are now financially secured against crop losses-- The increase is due to improved single market insurance conditions, premium rates and covereage triggers --A law on agricultural insurances and its own guideline on "Agricultural Finance and Agricultural Insurance" were established ---- In 2017, the Ministry of Agriculture (Ministerio de Agricultura y Riego, MINAGRI) also founded the Department of Financing and Agricultural Insurance (Dirección de Financiamiento y de Seguro Agrario, DIFESA). DIFESA ensures the leadership and commitment of the Ministry in the promotion and management of agricultural insurances. The Ministry of Agriculture, insurance companies and the Banking and Insurance Supervisor established a stable public-private partnership, as part of which a bimonthly public-private dialogue forum was set up
- Important actors in the project were sensitized and trained in the development of agricultural insurances --To improve the still poor information available at the beginning of the project, a method for the identification and zoning of agricultural land (Mapeo de Areas Agricolas, MAA) was tested in three regions.