Agriculture Risk Management by Using Weather-Based Crop Insurance Scheme

Agriculture is a risky activity, so farmers are faced with different weather risks, pests, disease, market risks and raw material. Every year farmers are concerned about paying loans and prices of life because of having an uncertain income. Of course risk, is and unavoidable element but it can be managed in business and agriculture productions. There are different kinds of risk management tools which cover wide range of risks and have been used in developed and developing countries. But insurance is an expensive tool and so designing new insurance patterns which in one hand stabilize the producers income and in the other hand reduce insurance implementation cost should be one of the important issues of researchers in risk management and agriculture crops insurance. Insurance systems associated with lots of problems due to asymmetric information, Adverse Selection and moral hazard. In this paper, different kinds of current pattern of agriculture crops insurance in Iran and world has been introduced. According to problems of traditional pattern of agriculture crops insurance like implementation costs and asymmetric information problems, insurance plan which based on climate-indexes is one of the efficient tools in agriculture risk management.