Reducing financial vulnerability to natural disasters in the agricultural sector in Mexico

Publication´s abstract

The purpose of this analysis is to examine how these two stressors, natural disasters and liberalised trade, affect agricultural livelihoods and the implications of these stressors on the poor in the agricultural sector. Special emphasis is given to the effects of natural disasters and trade liberalisation on migration patterns. In addition, the project aims at assessing policy options to reduce the vulnerability of small-scale farmers (e.g. government-supported insurance schemes) within the framework of the state’s withdrawal from directly subsidising the agricultural sector over the past 18 years. To further this aim, this work makes use of stakeholders’ consultation and descriptive analyses in three communities in southern Mexico, presenting how subsistence-agricultural livelihoods cope with natural hazards and adapt to stressors derived from liberalised trade, suggesting stakeholder-based solutions. The results of this research are part of a broader one comprised of cross- sector and spatial econometric analysis aimed at reducing the vulnerability of the Mexican economy to global change.

The paper discusses the following topics:

• Communities profile and hazards exposure (questionnaire description, communities profile, communities exposure)
• Farmers’ coping and adaptive strategies (emigration, financing sources for disaster risk and vulnerability reduction, scope of state social programmes, foreign trade, productive reorientation as an adaptive strategy)
• Farmers’ expectations and suggestions to reduce vulnerability: open questions (How are you expected to recover from next disaster? How would you suggest that the government reduces vulnerability to natural disasters in your community? How should the government improve agricultural income?)
• Views of community leaders, farmers unions’ representatives, and local authorities (income uncertainty, natural disasters, trade, crop diversification, suggestions to reduce vulnerability)

Conclusions:

• The survey presents evidence that vulnerability to disasters can lead to an apse in Mexican agriculture. The prevailing conditions of marginalisation in this region, along with insufficient state investments in infrastructure, limited credit grants, insufficient subsidies to crop insurance, and lack of investments in better yielding crops, greatly reduces the communities’ coping capacity when hazards strike, which in turn triggers migration.
• The preferred financing sources of farmers to cope with disasters in the region have been assistance from relatives and neighbours, as well as governmental aid. Pre-disaster financing instruments, such as savings and insurance, have not been used by these farmers.
• In essence, the availability of rural credit is decisive in the wish to abandon their agricultural livelihoods. Also, the lack of mechanisms to diversify crops seems to play a crucial role, as emigration is the preferred response of those farmers who are comparatively less prone to diversify their crops. Crop diversification appears to be the option most preferred by farmers with optimistic expectations; emigration is the preferred option for pessimistic farmers.
• Both farmers and authorities require a better understanding of local needs to optimise the allocation of public resources to reduce vulnerability to hazards, as well as increase the profitability of farm assets.