Antoine Leblois

Price vs. weather shock hedging for cash crops: ex ante evaluation for cotton producers in Cameroon

Abstract In the Sudano–Sahelian zone, which includes Northern Cameroon, the inter-annual variability of the rainy season is high and irrigation scarce. As a consequence, bad rainy seasons have a detrimental impact on crop yield. In this paper, we assess the risk mitigation capacity of weather index-based insurance for cotton farmers. We compare the ability of various indices, mainly based on daily rainfall, to increase the expected utility of a representative risk-averse farmer. We first give a tractable definition of basis risk and use it to show that weather index-based insurance is associated with a large basis risk, whatever the index considered. It has thus limited potential for income smoothing, a conclusion which is robust to the utility function. Second, in accordance with the existing agronomical literature we find that the length of the cotton growing cycle, in days, is the best performing index considered. Third, we show that using observed cotton sowing dates to define the length of the growing cycle significantly decreases the basis risk, compared to using simulated sowing dates. Finally we find that the gain of the weather-index based insurance is lower than that of hedging against cotton price fluctuations provided by the national cotton company. This casts doubt on the strategy of supporting weather–index insurances in cash crop sectors selling at international market prices without recommending any price stabilisation scheme.

La question de la vulnérabilité et de l'adaptation de l'agriculture sahélienne au climat au sein du programme AMMA

Rural populations in Soudano-Sahelian Africa are known to be particularly vulnerable to climate change due to a combination of naturally high levels of climate variability, high reliance on climate sensitive activities such as rain-fed agriculture and limited economic and institutional capacity to cope with and adapt to climate variability and change. Urgent actions are required to tackle the issues raised by climate change in Soudano-Sahelian Africa and these actions need to be supported by the best knowledge available. The AMMA program is attempting to revitalize research in Africa in this field through an integrated interdisciplinary framework that aims to increase our understanding of the problem and support decision making for the future.The first phase of AMMA tackled three major issues: (i) increase our understanding of the relationships between climate and agriculture (ii) quantify the vulnerability of agriculture productivity to climate change and (iii) explore pathways to cope with climate variability and change. This synthesis will show results from the first phase of the AMMA program to illustrate progress in each of these three issues.