World Bank to assess agri sector risk
…local insurances reluctant to venture in farming
The Government of Guyana is expected to benefit from evaluation studies conducted by the World Bank on the risks faced by the agriculture sector, specifically with respect to the rice supply chain.
This latest development comes at a time when local insurance companies seem unwilling to risk venturing in seeming volatile farming portfolio.
Minister of Agriculture, Robert Persaud, yesterday in comments to this newspaper, noted that local insurance companies do have agri insurance instruments but “have been reluctant to pursue. We are hoping through the World Bank’s assessment we can move them to offer. “
The comments came shortly after the Minister met with World Bank officials, to discuss the feasibility of agriculture risk transfer and insurance solutions for the sector as a whole.
“We want to start with rice and then include fruits, vegetables and the others since it’s important to the growth of the sector,” the Agriculture Minister remarked.
He noted that Government was keen on having the assessment done with much urgency and, although the World Bank’s input would be valuable, has planned to proceed regardless of the bank’s assistance.
“In order to guarantee sustainable growth in the agricultural sector it is important to define and implement an overarching risk management strategy, which includes the development of instruments such as insurance to reduce its vulnerability to frequent and extreme weather events and other sources of risks,” Minister Persaud said in a GINA release.
He noted that agriculture is the most important productive sector of Guyana’s economy and accounts for a third of Guyana’s Gross Domestic Product (GDP) and 30 percent of the country’s employment.
However, in the past five years, the sector has been affected by volatility in international commodity prices and extreme weather patterns which have contributed to a challenging environment for agricultural development.
As the country’s preferential access to the European market is phased out, the government is seeking to diversify the agriculture economy and its production systems, with emphasis on fruits and vegetables, livestock, aquaculture and other income-generating activities.
“The agriculture sector is not only vulnerable to increasingly unpredictable weather but also to a wide range of production constraints that compromise the competitive development of the sector,” World Bank Senior Agri Economist, Diego Arias pointed out.
Arias further stated that ensuring a competitive agriculture sector, and the design and development of an effective risk transfer solution are crucial to the country’s development.
World Bank Insurance Specialist, Ramiro Iturrioz, stressed that they would like to start immediately but the task is technical and consideration is being given to a multiplicity of ways to manage risk.
He said water management, currency fluctuation, crop disease and weather irregularity were some of the factors for which risk must be reduced or prevented.
As a way to manage risk, the Agriculture Ministry has introduced hybrid seeds and two new species of rice which have an increase yield per acre specifically in dry conditions.
The assessment of the rice supply chain will evaluate and prioritise risks, identify and rank areas of future policy interventions and investments needed for improving competitiveness.
The pre-feasibility study on agriculture risk transfer instruments, such as insurance, will be based on the analysis of the status of key areas for risk management, including technical, institutional, financial and agro-meteorological infrastructure.
This assessment will focus on the priority value chains such as rice, fruits, vegetables, livestock and aquaculture.