Partnership for Central America Convenes Key Stakeholders to Discuss Disaster Risk Insurance at Scale for Small Farmers

October 4, 2022 -—The Partnership for Central America (PCA) in collaboration with the World Food Programme (WFP) and the World Bank, with strategic support from TechnoServe, convened a working session to discuss the provision of Disaster Risk Insurance (DRI) at scale for small farmers and other vulnerable groups along the value chain in El Salvador, Guatemala, and Honduras. The session brought together stakeholders from national governments, the private sector, and USAID with the objective of defining a project consortium that can be announced at the upcoming United Nations Conference of Parties Meeting (COP27) (November 6-18, 2022). 

Introductory remarks by Leo Martinez-Diaz, Senior Director for Climate Finance to the U.S. Special Presidential Envoy for Climate John Kerry, and Mark Lopes, Chief Operating Officer of PCA were followed by four sessions in which participants delved into the context of climate risk in the region, examined the types of products and  models the consortium will consider, and determined next steps to define the initiative. 

“At the World Bank we recognize the need to enhance the financial resilience of smallholder farmers and vulnerable households affected by increasingly severe and frequent climate-related disasters in northern Central America. Our global and regional experience has demonstrated the value of strong partnerships between the public and private sectors to design and implement effective disaster risk financing solutions,” said Michel Kerf, World Bank Director for Central America and the Dominican Republic. “We are committed to deepening our engagements to benefit the most vulnerable groups in El Salvador, Guatemala, and Honduras.”

Two million agricultural producers in El Salvador, Guatemala, and Honduras are largely uninsured despite their significant vulnerability to climate risks. Climate change and the increased frequency of weather-related disasters exacerbate the already high risks encountered by smallholder farmers. 

“Together we can enhance the ability of Central American smallholder farmers to mitigate risks related to climate shocks through scalable and sustainable transformation,” said Lola Castro, WFP Regional Director for Latin America and the Caribbean. “Micro-insurance is an innovative way that smallholders can effectively manage risks and reduce vulnerabilities so they can transition to sustainable food and nutrition security.”

There is an opportunity to provide farmers in the region with financial security and increase resilience through DRI programs. Such programs have been successful elsewhere in the world at scale, and in the region at sub-scale. Existing programs funded and implemented by the public and private sector can be learned from and expanded. While many stakeholders support large-scale DRI across the region, no individual organization can implement a multi-country strategy alone. PCA envisions a collective effort in which current and potential stakeholders can play a role to advance this effort. 

“As we have seen too often–most recently with the catastrophic damage from Hurricane Fiona in Puerto Rico–disaster insurance is essential for smallholder farmers. In our market-based approach to improving farmer incomes for the long term, TechnoServe knows firsthand how DRI can promote food security, protect business investment, and help farmers fight poverty. That’s why we are excited to work with PCA in the kind of cross-sector partnership that is necessary to bring DRI at scale to the millions of farmers in Central America battling climate threats to build a better future for their families.” Will Warshauer, President and CEO of TechnoServe.

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The Partnership for Central America is a non-partisan, non-governmental organization that works with a multi-national coalition of private organizations to advance economic opportunity across underserved populations in El Salvador, Guatemala, and Honduras. The Partnership serves as a coordinating body of Vice President Harris’s Call to Action and aims to facilitate and support practical solutions to advance economic opportunity, address urgent climate, education and health challenges, and promote long-term investments and workforce capability in support of a vision of hope for Central America. If you are interested in learning more, please reach out to membership@centampartnership.org.