INSTRUMENT ANALYSIS

The Price Risk Facility (PRF), developed by Agtuall, is an insurance mechanism that bundles price protection into agricultural loans to stabilize smallholder farmer incomes and reduce credit risk for lenders. While India has government schemes like PMFBY for production risks, price risk remains largely unaddressed. The PRF uses a grant-funded risk pool to catalyze insurer participation and aims to scale from current pilots to insuring USD 500 million annually within three years. The facility intends to transition from pure price insurance to comprehensive revenue insurance covering both yield and price risks.

• The Price Risk Facility (PRF) addresses a critical gap in the Indian agricultural market where existing government schemes, such as the Pradhan Mantri Fasal Bima Yojna (PMFBY), focus on production risks like droughts and pests but leave farmers exposed to market price volatility.
• The PRF operates as an insure-tech vehicle led by Agtuall, which provides insurers with data and actuarial models to underwrite policies for lenders (banks, NBFCs, MFIs, and agri-fintechs). Payouts are triggered when the market price of a commodity falls below a predetermined strike price, with repayments for farmers adjusted accordingly.
• To catalyze adoption among cautious insurers, the PRF utilizes a USD 2 million risk pool funded by philanthropic grants. This pool covers 10-30% of payouts in the early years, with a planned phase-out starting from Year 4 as the instrument demonstrates commercial viability.
• Pilot projects have demonstrated the operational viability of the instrument. Between 2021 and 2025, Agtuall executed pilots with partners including Arya Collateral, Samunnati, and HDFC Bank, supporting approximately 11,800 farmers and enabling USD 5.26 million in loans.
• The PRF's financial projections estimate a significant scale-up over three years, aiming to enable USD 500 million in loans and benefit 600,000 farmers by 2028, with the total value of price risk insured reaching USD 65 million.
• The long-term strategy involves transitioning from price-only insurance to revenue insurance, which would cover both yield and price risks to provide comprehensive mitigation for input loans.

APA

Climate Policy Initiative (2025). INSTRUMENT ANALYSIS. https://www.climatepolicyinitiative.org/wp-content/uploads/2025/11/Price-Risk-Facility_Vehicle-Analysis.pdf

Chicago

Climate Policy Initiative. INSTRUMENT ANALYSIS. 2025. https://www.climatepolicyinitiative.org/wp-content/uploads/2025/11/Price-Risk-Facility_Vehicle-Analysis.pdf.

Wikipedia

{{cite report |author=Climate Policy Initiative |title=INSTRUMENT ANALYSIS |date=October 2025 |url=https://www.climatepolicyinitiative.org/wp-content/uploads/2025/11/Price-Risk-Facility_Vehicle-Analysis.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{climatepolicyinitiative2025instrument, author = {{Climate Policy Initiative}}, title = {{INSTRUMENT ANALYSIS}}, institution = {Climate Policy Initiative}, year = {2025}, month = oct, url = {https://www.climatepolicyinitiative.org/wp-content/uploads/2025/11/Price-Risk-Facility_Vehicle-Analysis.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }