This policy note is provided as anoutput under the World Bank’s Regional Advisory Service forSouthern Africa, ‘Developing a Regional Risk FinancingFramework for Agriculture and Food Security’. A keyobjective of this advisory service is to inform the publicsector in Southern Africa on improvements to agriculture andfood security risk financing policies and programs. The noteis an output under component two of the project, which aimsto identify agriculture risk financing policy options. Thenote aims to take stock of selected key financial risksaffecting the agriculture sector in the Southern AfricaDevelopment Community (SADC) region and provide options tobuild financial resilience. Weather risks, price volatility,and pests and diseases are among the most important shocksaffecting agricultural producers in the region, frequentlywith severe consequences for food security. This note gives(i) an overview of their regional impact in terms ofeconomic and financial cost, as well as effects on foodsecurity; (ii) describes the status quo of use ofagriculture risk financing instruments by countries in theregion; and (iii) derives policy recommendations to furtherimprove financial resilience to agricultural shocks usingagriculture risk financing instruments. It should be notedthat risk financing instruments are only one part of acomprehensive agriculture risk management approach. Othercomplementary agriculture risk management mechanisms andapproaches, such as the development of commodity exchanges,agriculture trade policy, or warehouse receipt systems, arenot the focus of this note.
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