This year's annual report in addition to the 2007 research work also covers key events in the first half of 2008, particularly matters pertaining to the continuing global food price crisis. There is a special section on the record-high food prices; and an introduction to ILRI's 'Improving Market Opportunities' Theme. This annual report comprises three chapters, viz., East Africa; South Asia; and Southern Africa.

This paper illustrates how weather derivatives indexed to forecasts of famine can be designed and used by operational agencies and donors to facilitate timely and reliable financing, for effective emergency response to climate-based, slow-onset disasters such as drought. We provide a general framework for derivative contracts, especially in the context of index insurance and famine catastrophe bond, and show how they can be used to complement existing tools and facilities in drought risk financing through a risk-layering strategy.

This strategy takes into account the new market opportunities being created for small-scale livestock producers by increasing local and global demand for high-quality livestock products (termed the Livestock Revolution) and the many pathways by which livestock has traditionally reduced poverty.