Resource information
Agriculture is among the most risk-prone
sectors in the economies of Central Asia. Production shocks
from weather, pests and diseases and adverse movements in
agricultural product and input prices not only impact
farmers and agri-business firms, but can also strain
government finances. Some of these risks are small and
localized and can be managed by producers. Others are the
result of more severe, exogenous shocks outside agriculture
or outside the country, which require a broader response.
Failure to respond adequately to these more severe risks
leads to a perpetual cycle of ‘shock-recovery-shock’, which
reinforces poverty traps and compromises long-term growth.
The agriculture sector’s exposure to production and price
risk is increasing. Climate change is increasing production
risks in the short to medium-term by increasing the
frequency and severity of droughts and floods and in the
longer-term by reducing the availability of water for
irrigation due to accelerated glacial melt. The
modernization and commercialization of agricultural
production and processing, which is critical for sector
growth, also raises the sector’s exposure to price risk at a
time of high volatility on international markets for
agricultural commodities. An effective response to these
risks requires a broader, more integrated approach to risk
management than the current system of ex-ante, public sector
activity associated with crop and livestock disease and ad
hoc, ex-post emergency responses to local disasters.
Measures to strengthen risk mitigation need to be
mainstreamed into sector development and investment
programs, additional human and financial resources need to
be allocated to the public institutions responsible for
ex-ante and ex-post risk management, and the potential for
transfer (insurance) mechanisms will need to be clarified
and developed where feasible. Given the limited human and
financial resources available for public sector activity, a
clear sense of the priorities for agriculture risk
management is also required, together with a balanced view
of the respective roles of public and private sector stakeholders.
