MITIGATING AGRICULTURAL RISKS THROUGH CROP INSURANCE: EVIDENCE FROM ANKOBER WOREDA

Agriculture plays a pivotal role in promoting economic growth, poverty alleviation, and food security in developing nations such as Ethiopia. Despite its importance, the sector continues to struggle with persistent challenges that hinder productivity and sustainability. Low agricultural productivity is often attributed to a combination of socioeconomic and technological limitations, including management inefficiencies, inadequate access to modern technologies and reliance on traditional farming methods, weak institutional support services, poor infrastructure, and unfavorable agricultural policies. These challenges are exacerbated by the exposure of farming activities to numerous risks stemming from the volatile economic and biophysical environment. Uncertainty in agriculture—driven by climate variability, erratic weather patterns, and natural disasters such as droughts, floods, and landslides—leads to unstable yields and income fluctuations for smallholder farmers. These risks threaten not only household livelihoods but also national food security and rural development. One viable strategy for mitigating such risks is the adoption of agricultural insurance mechanisms, particularly crop insurance. Crop insurance serves as a financial safety net, protecting farmers against yield losses and providing them with a level of resilience in the face of environmental and market shocks. This study aims to explore the role of crop insurance in managing agricultural risks, with a focus on its potential to safeguard smallholder farmers in Ethiopia. It highlights how the implementation of effective insurance schemes can empower farmers to invest in improved farming practices and technologies, thereby enhancing productivity and reducing vulnerability. The findings underscore the need for supportive policy frameworks, increased awareness, and strengthened institutional capacity to ensure the success of crop insurance as a risk management tool in Ethiopian agriculture..