According to the latest UN ESCAP estimates, droughts have caused an annual economic loss of roughly US$ 23,308 million to Indonesia. Global initiatives have recommended the use of insurance to protect agricultural livelihoods, but currently most farmers are not aware of the benefits of insurance, and have a low ability to pay. The government has issued Permendesa No. 6 of 2020, which provides fiscal instruments for disaster management, namely Dana Desa or Village Fund. Nonetheless, there is still a lack of understanding about Village Fund for disaster related uses. This policy brief provides three policy recommendations for the utilisation of financial risk transfer instruments and overall agricultural development. First, provisions of a social safety net for farmers through weather index-based insurance subsidised by Village Fund. Second, Development of a Social and Solidarity Supermarkets (“SSMs”) for Post-catastrophe Food Security. Lastly, establishment of an Agricultural Resilience Task Force (“ARTF”).