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Report No. 32727-GLB Managing Agricultural Production Risk Innovations in Developing Countries June 2005 The World BankAgriculture and Rural Development Department ? 2005 The International Bank for Reconstruction and Development / The World Bank 1818 H Street, NW Washington, DC 20433 Telephone 202-473-1000 Internet /rural E-mail ard@ All rights reserved. The findings, interpretations, and conclusions expressed herein are those of the author(s) and do not necessarily reflect the views of the Board of Executive Directors of the World Bank or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. The boundaries, colors, denominations, and other information shown on any map in this work do not imply any judgment on the part of the World Bank concerning the legal status of any territory or the endorsement or acceptance of such boundaries. Rights and Permissions The material in this work is copyrighted. Copying and/or transmitting portions or all of this work without permission may be a violation of applicable law. The World Bank encourages dissemination of its work and will normally grant permission promptly. For permission to photocopy or reprint any part of this work, please send a request with complete information to the Copyright Clearance Center, Inc., 222 Rosewood Drive, Danvers, MA 01923, USA, telephone 978-750-8400, fax 978-750-4470, . All other queries on rights and licenses, including subsidiary rights, should be addressed to the Office of the Publisher, World Bank, 1818 H Street NW, Washington, DC 20433, USA, fax 202-522-2422, e-mail pubrights@. Contents Contents iii Acronyms and Abbreviations vi Preface and Acknowledgments ix Executive Summary xi 1. Introduction 1 2. Risk and Risk Management in Agriculture 3 Informal mechanisms 7 Formal mechanisms 8 3. Approaches to Agricultural Risk in Developed Countries 11 Crop Insurance Programs in Developed Countries 11 Why the Experienc