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 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.
|Date of creation:||01 Feb 2004|
|Date of revision:|
|Contact details of provider:|| Postal: 1818 H Street, N.W., Washington, DC 20433|
Phone: (202) 477-1234
Web page: http://www.worldbank.org/
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Stefan Dercon, 2000.
"Income risk, coping strategies and safety nets,"
CSAE Working Paper Series
2000-26, Centre for the Study of African Economies, University of Oxford.
- Dercon, Stefan, 2002. "Income Risk, Coping Strategies and Safety Nets," Working Paper Series UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).
- Stefan Dercon, 2000. "Income risk, coping strategies and safety nets," Economics Series Working Papers WPS/2000-26, University of Oxford, Department of Economics.
- Robert Holzmann & Steen Jørgensen, 2001.
"Social Risk Management: A New Conceptual Framework for Social Protection, and Beyond,"
International Tax and Public Finance,
Springer, vol. 8(4), pages 529-556, August.
- Robert Holzmann & Steen Jorgensen, 2000. "Social risk management : a new conceptual framework for social protection and beyond," Social Protection and Labor Policy and Technical Notes 21314, The World Bank.
- Takeshi Sakurai & Thomas Reardon, 1997. "Potential Demand for Drought Insurance in Burkina Faso and Its Determinants," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 79(4), pages 1193-1207.
- Binswanger, Hans P & McIntire, John, 1987. "Behavioral and Material Determinants of Production Relations in Land-Abundant Tropical Agriculture," Economic Development and Cultural Change, University of Chicago Press, vol. 36(1), pages 73-99, October.
- Gurenko, Eugene & Mahul, Olivier, 2003. "Combining insurance, contingent debt, and self-retention in an optimal corporate risk financing strategy," Policy Research Working Paper Series 3167, The World Bank.
- Siegel, Paul B. & Alwang, Jeffrey & Canagarajah, Sudharshan, 2001. "Viewing microinsurance as a social risk management instrument," Social Protection and Labor Policy and Technical Notes 23305, The World Bank.
- Mario J. Miranda & Joseph W. Glauber, 1997. "Systemic Risk, Reinsurance, and the Failure of Crop Insurance Markets," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 79(1), pages 206-215.
When requesting a correction, please mention this item's handle: RePEc:wbk:wbrwps:3211. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Roula I. Yazigi)
If references are entirely missing, you can add them using this form.