Basic Source of income Rural income of Pakistan is derived mainly from farm and non-farm sources. Agriculture is the primary source of rural income as 60 percent of the rural labor force is engaged in agriculture sector. Risk Management in Financing Agriculture The complexity of managing agricultural risk carries important implications for managing risk related to financing agriculture. Both formal and informal risk management strategies apply at the various levels between that of the household and that of the society. Informal risk management strategies are generally more prevalent at (i) the household level, where they are, for the most part, used to mitigate risk, and (ii) at the community level, where they are mainly used to share risk. Formal risk management generally applies at the level of the market, where it is mostly used to share or transfer risk, and at the level of public policy, where it is mainly used to either transfer or to absorb risk. Informal risk management strategies Savings Buffer Stocks Enterprise diversification Low risk, low return cropping patterns Production techniques Food crop sharing Common property resource management Social reciprocity Rotating savings/credit Formal Risk Management Measures Contract marketing Financial hedging tools (options) Traditional insurance Weather-index insurance Contingent funds for disaster relief Pest/disease management Physical crop/food stocks Price guarantees or stabilization funds Input subsidies Public insurance More about risks… Pakistan is facing existence of five major risks related to climate change including rise in sea level, glacial retreats, floods, higher average temperature and higher frequency of droughts.  In addition, being a predominantly agricultural economy, climate change is estimated to decrease crop yields in Pakistan not only as a result of flooding, but also as a result of changing temperatures, which in turn will affect livelihoods and food production.  Deterioration of climate is irreversibly harming Pakistan, as the glacier melt in the Himalayas is projected to increase flooding and affect water resources within the next two to three decades.  This will be followed by decreased river flows over time as glaciers recede. The glacial melt will affect fresh water flows with dramatic adverse effects on biodiversity and livelihood with possible long-term implications on regional food security. Effective risk management strategies Promote the use of drought resistant varieties. Promote alternate farming practices. Promote reduced cultivation of water intensive crops in the circumstances of water scarcity. And the government should invest in building dams and reservoirs for water storage and mitigating the chances of devastating floods we have experience during recent years.

1. The risks faced by the farmers of Pakistan.
By Khadija Khalid.

2. Rural income of Pakistan is derived mainly from farm and
non-farm sources.
Agriculture is the primary source of rural income as 60
percent of the rural labor force is engaged in agriculture
sector.

3. The complexity of managing agricultural risk carries
important implications for managing risk related to
financing agriculture.
Both formal and informal risk management strategies apply
at the various levels between that of the household and
that of the society.
Informal risk management strategies are generally more
prevalent at (i) the household level, where they are, for
the most part, used to mitigate risk, and (ii) at the
community level, where they are mainly used to share
risk.
Formal risk management generally applies at the level of
the market, where it is mostly used to share or transfer
risk, and at the level of public policy, where it is mainly
used to either transfer or to absorb risk.

4. Savings Buffer Stocks
Enterprise diversification
Low risk, low return cropping patterns
Production techniques
Food crop sharing
Common property resource management
Social reciprocity
Rotating savings/credit

5. Contract marketing
Financial hedging tools (options)
Traditional insurance Weather-index insurance
Contingent funds for disaster relief
Pest/disease management
Physical crop/food stocks
Price guarantees or stabilization funds
Input subsidies
Public insurance

6. Pakistan is facing existence of five major risks related to
climate change including rise in sea level, glacial retreats,
floods, higher average temperature and higher frequency
of droughts.
In addition, being a predominantly agricultural economy,
climate change is estimated to decrease crop yields in
Pakistan not only as a result of flooding, but also as a
result of changing temperatures, which in turn will affect
livelihoods and food production.
Deterioration of climate is irreversibly harming Pakistan,
as the glacier melt in the Himalayas is projected to
increase flooding and affect water resources within the
next two to three decades.
This will be followed by decreased river flows over time as
glaciers recede. The glacial melt will affect fresh water
flows with dramatic adverse effects on biodiversity and
livelihood with possible long-term implications on regional
food security.

7. Promote the use of drought resistant varieties.
Promote alternate farming practices.
Promote reduced cultivation of water intensive crops in
the circumstances of water scarcity.
And the government should invest in building dams and
reservoirs for water storage and mitigating the chances of
devastating floods we have experience during recent
years.