20 September 2023 – The Bank for Agriculture and Agricultural Cooperatives (BAAC) and GIZ launched the first joint workshop to enhance and anchor the development of climate risk financing and innovative financial tools that would enable smallholder farmers to boost their livelihoods and resilience to climate change.

Held at the BAAC’s head office, the one-day brainstorming session held through the “Innovative Climate Risk Financing for the Agricultural Sector in the ASEAN Region Project” (AgriCRF) marked the groundwork for collaboration between the two agencies. Commissioned by the German Federal Ministry for Economic Cooperation and Development (BMZ), this three-year project is aimed at improving climate resilience, as well as promoting gender equality and the availability of financial products, which are regarded as the three key solutions to sustainable agriculture.

“We’re facing more frequent natural disasters and extreme weather events around the world than ever and such impacts on farmers in the agricultural sector are unavoidable. That’s why we are committed to seeking ways to support our farmers to become more resilient amid climate risk,” Pongphun Jongruk, BAAC Senior Executive Vice President said during the opening of the workshop.

Up to 30 agricultural finance and crop insurance experts from the two agencies attended the workshop, which followed on from the signing by BAAC and GIZ of the Memorandum of Understanding (MoU) on 7 March 2023. Together, the agencies will enhance the capacities not only of BAAC staff but the more than four million Thai farmers who are BAAC clients to access financial resources essential for adapting to become more climate resilient.

To scale up technical capacity and readiness for BAAC staff and smallholder farmers to access to climate risk financing and green agricultural finance, both agencies will take further steps upon implementation of the following to align with the MoU framework and the AgriCRF work packages during the implementation of the AgriCRF project from January 2023 to December 2025:

1. Development of a financial knowledge management approach integrating climate risk financing and capacity building for BAAC staff and smallholder farmers
2. Increase the availability of innovative climate risk management and green financial tools that are applicable to and aligned with Thailand’s Bio-Circular-Green Economic Model
3. Feasibility analysis to pilot index-based crop insurance products and application to the InsuResilience Solutions Fund (ISF)

“The ongoing collaboration between BAAC and GIZ is centred on promoting sustainable finance for agriculture in Thailand. Our shared mission is to support the livelihoods of smallholder farmers, enhance their resilience against the impacts of climate change, and reduce greenhouse gas emissions contributing to global warming. This collaboration will complement the implementation of other GIZ projects and collaboration between BAAC and GIZ to promote sustainable, low-emission rice farming and agricultural production,” said Dr Nana Kuenkel, GIZ Agriculture and Food Cluster Coordinator.

During the morning breakout session, participants learned about the necessity of climate risk financing tools for smallholder farmers in Thailand and actively shared their inputs and recommendations on how to implement the project and drive forward the initiatives following the proposed work packages. The afternoon session focused on knowledge exchange with a financial expert from the German Sparkassenstiftung (German Government Savings Bank) for International Cooperation (DSIK) on climate risk management tools for the financial sector. This was followed by exchanges on interest in and the possibility of upscaling and accessing international funds targeting crop insurance as climate risk management for smallholder farmers.

The suggested work packages draw on the initial suggestions gathered from the AgriCRF National Stakeholders Kick-Off workshop in March this year, where ideas from public and private agencies in agriculture, finance, insurance and the technology sector were collected. In addition, the BAAC executive management and representatives from GIZ Thailand went on a study visit to Germany-based public, academic, and private institutions in the field of sustainable, green and climate finance in the agricultural sector in May. The field trip provided a team of delegates with expertise in innovative instruments and business models for green finance and sustainable agriculture, and especially climate-smart agriculture.