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Crop Insurance
Crop insurance is normally purchased by farmers to protect themselves against crop failures due to natural disasters, such as floods, hail, and drought. Crop insurance may also be subsidized by the government.

However, in recent years the possibility of addressing agricultural risk factors by issuing derivatives on weather elements has been explored. The new approach turns away from the traditional form of insurance that, in practice, has proved to have serious limitations and the proposed approach is an insurance based on weather based indices such as an insurance based on indices of precipitation defined during the critical growth period of annual crops.

The implementation of this insurance by the government covering natural disasters (i.e. drought and flood) will allow immediate disposal of funds through indemnification for emergency actions and mitigation.

FAO and Climate2006 - A Weather Yield Index for maize Crop Insurance in Malawi
[PDF, 802 kb]
The Commodity Risk Management Group of the World Bank has developed a prototype Malawi Maize Production Index (MMPI), constructed from weather data..

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