Public-Private Partnership to Spearhead Farmer-Centered Agriculture Insurance in Uzbekistan

September 7, 2023
Photo: UNDP Uzbekistan

The United Nations Development Programme (UNDP) is proud to announce a groundbreaking collaboration with the Insurance Development Forum (IDF), the German Government, and the Government of Uzbekistan. A signing ceremony marking the launch of a new project took place on the sidelines of the International Conference on Food Security in Samarkand on 7 September 2023. This is a significant milestone in advancing agriculture insurance in Uzbekistan through a farmer-centered approach.

This partnership marks the launch of a EUR 1.9 million project aimed at the development and implementation of a sovereign risk transfer scheme. This scheme will introduce a multi-peril indemnity insurance product designed to safeguard climate-vulnerable farmers in Uzbekistan.

Agriculture is a building block of Uzbekistan's economy, contributing significantly to its national GDP, accounting for approximately 27%. Within this vital sector, smallholder farmers, locally known as dehqan farmers, cultivate 13% of the nation's farmland and contribute a substantial 65% to the gross agricultural output.

Photo: UNDP Uzbekistan

Uzbekistan's reliance on agriculture, particularly through its smallholder farms, exposes the country to the unpredictable impacts of climate change and natural disasters. Through this partnership and the innovative insurance solution established under the Tripartite Agreement, we anticipate reaching and benefiting an initial group of 16,910 farmers and their families. This initiative empowers smallholder farmers with effective and inclusive insurance coverage, thereby bolstering their resilience in the face of climate challenges.

Mr. Alisher Shukurov, Deputy Minister of Agriculture in the Republic of Uzbekistan, stated, 

“UNDP is a trusted partner of the Ministry of Agriculture of Uzbekistan in combating climatic risks in agriculture and building the resilience of the farmers and smallholders. Therefore, we believe that the current new joint initiative will transform the agricultural insurance market in the country and will support our efforts for agri-food climate change adaptation and mitigation.”
Photo: UNDP Uzbekistan

Anas Fayyad Qarman, UNDP Resident Representative a.i. in Uzbekistan, highlighted the project's significance, stating 

“In the face of accelerating climate risks and natural disasters worldwide and in Uzbekistan, the upcoming project will help to build the resilience of the farmers and smallholders in the country. To this end, the project facilitates and promotes a risk-informed decision-making process in the agriculture sector for farmers and the Government alike by enhancing their knowledge and capacity in collaboration with international industry members. Further, it will contribute to strengthening national food security and enhance the resilience of rural communities against climate risks and accelerate the achievement of SDGs in the country.”

Central to this project is the development of an indemnity-based insurance solution that provides compensation based on actual crop loss, assessed by trained loss adjusters. This farmer-centered approach facilitates direct engagement with farmers, nurturing the growth of local insurance markets and the transfer of knowledge regarding risks and crops.

Photo: UNDP Uzbekistan

To enhance the resilience of smallholder farmers against climate change impacts, international insurers Europa Re and Swiss Re are partnering with local insurance companies Uzagrosugurta and Semurg. Together, they will develop an agriculture insurance product tailored to the specific needs of Uzbek farmers.

In its initial phase, the project will conduct a pilot of the insurance products in Fergana, Namangan, and Andijan regions during the first year, with plans to expand coverage to include additional types of fruits and vegetables in the second year.

Nadica Jovanovska Boshkovska, Chief Project Officer at Europa RE, emphasized the project's local impact, saying,

"By facilitating the transfer of local knowledge and establishing direct relations with beneficiaries, we are able to create insurance products that are not only more relevant but have a real impact on the lives of small-scale farmers in Uzbekistan."

The Uzbekistan Ministry of Agriculture will work closely alongside the UNDP to support project implementation. The InsuResilience Solutions Fund (ISF) co-funds the project, playing a crucial role in accelerating growth and the potential extension of this initiative across the country.