Workshop: Agricultural and climate risk insurance in Indonesia

On 24 November, Social Finance facilitated a workshop on agricultural and climate risk insurance in Indonesia, organized as part of our partnership with IFAD's Insurance for Rural Resilience and Economic Development Programme (INSURED) and in collaboration with the Indonesian Ministry of National Development and Planning (Bappenas). The workshop shared lessons learned on both the demand and supply side, success factors and opportunities for improvement for climate and agricultural risk management in the country. It included insights from the Ministry of Agriculture and Bappenas and key findings and recommendations from the INSURED activities.

Indonesia’s economy depends on the agricultural sector and the hard work of its small holder farmers and other value chain stakeholders. At the same time, the agricultural sector is particularly exposed and vulnerable to natural disasters and weather events. The government of Indonesia has made efforts to narrow the insurance protection gap, but it is still too wide to offer protection to smallholder farmers and other value chain stakeholders against these risks.

The government is aware of the need to strengthen the resilience of the agricultural sector. Although insurance is not a silver bullet, it has been recognized by the government of Indonesia as an important piece of the puzzle to build resilience. The government has mobilized efforts to design, implement and subsidize insurance schemes that protect smallholder farmers and other value chain stakeholders. Examples include a rice farm business insurance scheme, a livestock insurance scheme and a shrimp farming insurance scheme.

The workshop used different interactive formats to facilitate open exchange of experiences and ideas. Bapennas and the Ministry of Agriculture gave an overview of the government’s initiatives and the successes and challenges in mitigating risks of smallholder farmers. INSURED’s presentations focused on the demand and supply side opportunities and challenges and how they can be built into the IFAD’s initiatives in the country. Discussions focused on building scale and sustainability of agricultural insurance in Indonesia through mechanisms to create value for smallholder farmers and the (non-)financial institutions working with them.

The workshop was attended by over 50 participants, representing various stakeholders such as regulators, the central bank, financial service providers, insurance companies, farmer federations and technology services providers. The participants appreciated the informative mix of topics and the open discussions as a great opportunity for knowledge and experience sharing.