We show theoretically that the presence of basis risk in index insurance makes it a complement to informal risk sharing, implying that index insurance crowds-in risk sharing and leading to a prediction that demand will be higher among groups of individuals that can share risk. We report results from rural Ethiopia from a first attempt to market weather insurance products to existing informal risk-sharing groups. The groups were offered training on risk management and the possible benefits of holding insurance.
Supply chain risk has become a major area of concern for companies in the agribusiness sector, as well as for their customers, financiers, and external stakeholders. This Good Practice Handbook is intended for those agro-commodity companies that want to better manage supply chain environmental and social risks. The Handbook focuses on five major agro-commodity supply chains—palm oil, soy, sugarcane, cocoa, and coffee—but many of the tools, resources, and case studies can be used as guidance for other agro-commodities.