Financial Risk Management in Agriculture : Analyzing Data from a New Module of the Global Findex Database
The ability to manage financial risk is especially important for people earning their living through agriculture. Many farmers only get paid once or twice a year, and households need to stretch their earnings across the year by saving or borrowing...
| Main Authors: | , , , |
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| Format: | Working Paper |
| Language: | English |
| Published: |
World Bank, Washington, DC
2019
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/544071576074656430/Financial-Risk-Management-in-Agriculture-Analyzing-Data-from-a-New-Module-of-the-Global-Findex-Database http://hdl.handle.net/10986/33022 |
| Summary: | The ability to manage financial risk is
especially important for people earning their living through
agriculture. Many farmers only get paid once or twice a
year, and households need to stretch their earnings across
the year by saving or borrowing money. Moreover,
agricultural production faces a variety of risks related to
both production and markets because of their exposure to
weather and disease shocks. Households engaged in
agriculture may thus especially benefit from financial
inclusion—access to and use of formal financial services.
This paper explores the topic of financial risk management
in agriculture—how adults who rely on growing crops or
raising livestock as their household's main source of
income manage financial risk and use financial services. The
paper summarizes new data based on a nationally
representative survey of about 15,000 adults in 15
lower-middle- and low-income Sub-Saharan African economies
collected as part of the World Bank's Global Findex
database. The majority of these adults reported suffering a
bad harvest or significant livestock loss in the past five
years, and most bear the entire financial risk of such a
loss. Most adults in agricultural households lack the
financial tools -- such as insurance, accounts, savings, and
credit -- that could help them manage financial risks. |
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