report
of aquaculture insurance, a regional workshop held in Bali in 2007, on the promotion of aquaculture insurance for small-scale farmers in the Asian region suggested the development of a layered risk management system, called the “hybrid approach”. At the bottom of the system is improved on-farm management based on adoption of better management practices (BMPs) by groups or clusters of farmers. Next is the development of mutual insurance schemes among groups of farmers and their associations, which constitutes the first level of insurable risks. The next level includes participation of national and international insurance and reinsurance companies. Finally, the top level consists of well-managed government emergency disaster relief systems and improved extension services. At a subsequent workshop, it was agreed that the shrimp farming sec-
The hybrid financial approach considers a combination of insurance between producers’ groups, insurance and reinsurance companies and the government
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tor of Thailand would constitute an ideal group for the application of the “hybrid approach” and that formation of a mutual insurance company to be owned and operated by shrimp farmers themselves would be the best way forward. It was also recognized that Government would be required to provide an enabling environment through a policy and legal framework that would allow the establishment of a mutual insurance scheme. A committee would be formed to report on the social, legal and financial feasibility of this project.
Challenges and Opportunities Small-scale aquaculture producers in developing countries are facing new sector challenges and opportunities
for raising incomes and livelihoods as the demand for aquaculture products continues to grow in both domestic and international markets. However, most small-scale producers have no access to reliable, affordable inputs and knowledge, financial, technical or transport services. Moreover, those who are able to access markets have a weak bargaining position. Small-scale producers have to deal with increased risks related to thin and volatile markets, compete with large commercial producers from all around the world and meet increasingly stringent quality and safety requirements demanded by buyers and consumers. This requires considerable investments; however, small-scale producers find it difficult to comply with these requirements and hence effectively integrate into modern supply chains. Despite these challenges, there are many opportunities to bring social and economic benefits to small-scale producers, who should be supported to develop commercially viable businesses that would have scope to increase in value for the international markets over time. Experience shows that, in addition to ensuring access to financial services, a set of complementary investments is usually needed to achieve business goals. There are many types of investments that would