Friday, June 24, 2011

New Agriculture Price Risk Management Tool To Help The Poor

Just a day before Agriculture Ministers from G-20 countries convene in France to discuss how to resolve the issue of global food price volatility and its effect on development, The World Bank has launched a risk management tool that can protect the food producers and consumers from the negative effect of price volatility. The risk management tool called The Agriculture Price Risk Management product, or APRM, will initially be deployed by the International Finance Corp. and JPMorgan Chase. Both IFC and JPMorgan will commit $200 million worth of credit exposure each to clients using specific price hedging products which will protect them from price volatility.

The World Bank President Robert Zoellick said “With this new tool, we can help farmers, food producers, and consumers protect themselves against price swings, strengthen their credit position, and increase their access to finance. This tool shows what sensible financial engineering can do: make lives better for the poor.” IFC expects to partner with other banks in the future as well in order to provide the poor farmers with the risk management tool.

-Nisha Noor