Munich Re and GIZ are cooperating on an agricultural model project in Peru
Germany's Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH and Munich Re are supporting the establishment of a risk transfer system for agriculture in Peru. For this purpose, they have launched the project "Integrated Financial Management of Climate Risks in Peru's Agricultural Sector". The aim is to develop, together with the Peruvian authorities, a legal, institutional and structural framework for a system to protect agricultural production against weather-related risks.
Munich. The focus of the project is a risk transfer system for farmers based on a public-private partnership between the Peruvian government, farmers and the insurance industry. Munich Re and GIZ are providing advice to the partners. The project plan also includes the creation of an agricultural information system to improve available data on production and yields. Besides this, the project will train specialists to manage and supervise the risk transfer system.
Joachim Herbold, Munich Re's expert on agricultural insurance and the project's technical advisor: "The Peruvian agricultural sector faces great challenges, which are being aggravated by climate change and the increasing fluctuations in associated yields. Munich Re is contributing its know-how to develop a comprehensive system that provides farmers with sustained protection against natural hazards."
The agricultural sector in Peru has seen strong growth in recent years, and it plays a major role in the Peruvian economy. Agricultural product exports increased from US$ 624m in 2003 to US$ 3.4bn in 2013. One of agriculture's greatest challenges is weather-related risks, in particular drought, flooding and frost, all of which have been exacerbated by climate change. The planned risk transfer system is to be supported by the Peruvian government, and the agricultural, banking and insurance sectors. To protect as many farmers as possible, the system must take into account the climatic conditions existing in the country and gear itself to the needs of the different types of agricultural operation – from small-scale farmers to large commercial farms.
GIZ expert Philine Oft: "We are pleased to be able to work together with Munich Re on the creation of sustainable agricultural insurance markets in Peru. The risk transfer system we are developing should benefit Peruvian farmers and protect them from the financial burdens of crop losses from extreme weather events. In future, the system may even serve as a blueprint for other countries."
The project will last for five years and is being sponsored by the International Climate Initiative (ICI) of the German Federal Ministry for the Environment, Nature Conservation, Construction and Nuclear Safety (BMUB).
GIZ is a federally owned enterprise that operates globally. It assists the German Federal Government in international cooperation projects on sustainable development and in international educational work. GIZ helps people and companies develop perspectives of their own and improve their living conditions. More information on the work of GIZ in Peru is available at: www.giz.de
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