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Category: Development

Published May 11, 2011

Index Insurance in Africa

From a post on the New York Times‘ Opinionator blog:

“The insecurity of farming sabotages yields even when the weather is good.  Because of the risk, many farmers are unwilling to bet all their money on a crop, so they sow only a portion of their land.   Or they use poor quality seeds because they do not want to increase their risks by spending more.  Risk makes it very difficult for farmers to get credit to buy needed seeds, fertilizer, herbicides or insecticides, so their yields are stunted.  These are people who can ill afford to get less than the maximum from their plots.

Weather insurance for small farmers has always faced numerous barriers.  But throughout east Africa today there are projects finding creative and innovative ways to overcome them.”

This is quite à propos, as I am going to Washington, DC this weekend for the Index Insurance Innovation Initiative (I4) technical workshop, which will convene the I4 grant recipients to discuss the technical details of index insurance implementation and evaluation.

(HT: Chris Paul.)

 

Published May 7, 2011

Secretary Clinton on Rising Food Prices

From WRAL news:

“Speaking to a room full of ambassadors to the Rome-based United Nations food agencies, Clinton warned that some countries had adopted ‘unwise’ policies such as export bans during the 2007-2008 food crises ‘that only made matters worse’ by driving up prices, encouraging hoarding and panic buying and discouraging farmers from producing more. (…)

‘Rising food prices can have a positive effect if they send a signal to farmers to grow and sell more. But that can only happen if there is transparency in markets and stocks, so signals about prices and food supply are accurately received,’ Clinton said.

She called for countries to adopt better policies this time around and said the United States was working with developing and industrialized nations ‘to encourage everyone to respond to rising food prices not with failed policies of the past but with a sounder approach.'”

Secretary Clinton is right. Developing countries should resist the temptation to close themselves off to international trade by restricting food exports. Such measures only serve to exacerbate the problem of raising food prices. This in turn increases the number of people suffering from hunger.

What can be done to curb rising food prices? First off, investments in agricultural research and biotechnology have the potential to bring considerable productivity gains in agriculture. Second, the US government should allow developing countries to truly tap into their comparative advantage instead of undercutting them by subsidizing American farmers.

(HT: Camille Jackson.)