Understanding the Business Risks of Understanding the Business Risks of Climate Vulnerable Small Scale FarmingClimate Vulnerable Small Scale Farming

Dr. Jacob ParkDr. Jacob ParkAssociate Professor ofAssociate Professor of

Business Strategy and SustainabilityBusiness Strategy and SustainabilityGreen Mountain College (USA)Green Mountain College (USA)E-mail: E-mail: parkj@greenmtn.edu

Climate Smart Agriculture SymposiumClimate Smart Agriculture SymposiumJamaica Rural Economy and Ecosystems Adapting to Jamaica Rural Economy and Ecosystems Adapting to

Climate Change (JA REEACH) ProjectClimate Change (JA REEACH) ProjectJuly 16, 2015July 16, 2015

Presentation Outline Presentation Outline

How can the business of climate vulnerable small scale farmers/ agricultural enterprises be “derisked” in the context of Jamaica?

Disaster & Project Management Risks Climate Change Risks Farming & Agricultural Enterprise Risks Inclusive Climate Smart Agriculture Enterprise Platform

DISASTER & PROJECT DISASTER & PROJECT MANAGEMENT RISKSMANAGEMENT RISKS

Similar to a mutual insurance company, CCRIF functions on behalf of 16 participating states in the Caribbean, and purchases coverage up to a limit of approximately US$100 million for each insured hazard (tropical cyclones, earthquakes or excess rainfall events).

By pooling these catastrophe risks into a single diversified portfolio, capital needs for paying claims are significantly lowered (see figure on the left). This in turn leads to a pricing reduction of about half of what it would cost if countries were to purchase identical coverage individually.

Source: http://www.ccrif.org (“Understanding CCRIF”, March 2015 report)

CLIMATE CHANGE RISKSCLIMATE CHANGE RISKS

Source: http://www.wbcsd.org/work-program/sector-projects/water/waterenergyfood.aspx

Climate Change, Water, Energy, Food Climate Change, Water, Energy, Food NexusNexus

Climate Resilient Agricultural Climate Resilient Agricultural TechnologiesTechnologies

SELECT EXAMPLES

Drip irrigation  Approaches that involve applying water directly around roots 

Water harvesting: Irrigation that uses earth dams, channels and other ways of directing water toward crops

Drought tolerance Plant varieties that can process available moisture more readily and that are less vulnerable to water deficiency

Integrated soil fertility management New fertilizer and composting combinations

No-till Farming that involves little or no soil disturbance and potentially the use of cover crops

Precision agriculture GPS-assisted, machine to machine solutions that combine information collected by sensors with automated management

AGRICULTURAL AGRICULTURAL ENTERPRISE MARKET RISKSENTERPRISE MARKET RISKS

Base of the Pyramid Regional Market Base of the Pyramid Regional Market Report (2015)Report (2015)

Inter-American Development Bank Inter-American Development Bank

Small Medium Sized Enterprises Small Medium Sized Enterprises Capital Financing Capital Financing

‘‘Affordable’ Cold Chain Technology and Affordable’ Cold Chain Technology and Transport SystemTransport System

Source: Geography of Transport Systems (2013) http://people.hofstra.edu/geotrans/eng/ch5en/appl5en/ch5a5en.html

Source: Fresh Realm http://freshrealm.co/

INCLUSIVE CLIMATE SMARTINCLUSIVE CLIMATE SMART AGRICULTURAL AGRICULTURAL ENTERPRISEENTERPRISE PLATFORMPLATFORM

Agricultural Technology

Financial Inclusion

•Enterprise financing•Venture capital•Index Insurance

Climate Smart Engagement & Outreach

INCLUSIVE CLIMATE SMART

AGRICULTURAL ENTERPRISE PLATFORM

•Drip irrigation•Water harvesting•Precision agriculture

•Food/agriculture waste to energy•Last mile market dilemma•Agricultural value chain analysis

Source: Adapted from Parrish, Bradley D. 2010. “Sustainability-driven Entrepreneurship: Principles of Organization Design” Journal of Business Venturing 25, 510-523.

Inclusive climate smart Inclusive climate smart agricultureagriculture enterprise platformenterprise platform