By Mwangi Muiruri, Daily Nation Kenya -
No one took them seriously but it appears small-scale farmers are now digging in for a big stake in the insurance industry. The introduction of insurance cover for crop failure promises to give farmers not only control of their farming, but could also turn them into a niche market for insurance companies groping for clients is a near-stagnant market.
The micro-insurance cover was pioneered in Kenya through a collaboration between Syngenta Foundation for Sustainable Agriculture, UAP Insurance, Safaricom and 54 local agro-vets.
Under the programme, too, are 30 weather stations, each covering a micro-climate of a maximum of 15-20km radius.
Suppliers sponsor half of the premium’s price, leaving farmers to pay 5 per cent on top of the cost of the inputs. The product debuted in Kenya in 2009 with a pilot project in Laikipia district. Ms Rose Goslinga, the project’s coordinator, says it involved 700 maize farmers who were insured against drought.
“Following the drought that hit them, all farmers were compensated depending on the extent of the drought,” she says.
The programme has partnered with agro-vets across the country and serves 11,000 farmers spread across Western Kenya, Southern Nyanza, Uashin Gishu, Embu, and Laikipia East.
Analysts say the Insurance Regulatory Authority should amendment law to accommodate this new scheme. Through micro-insurance, most farmers who find mainstream cover unaffordable will have one reason to farm more and improve food security in the country.
In 2007, Kenya FinAccess found that 69 per cent of Kenyans find insurance unaffordable. Ms Jayne Gathii, who is in charge of agri-business for marginalised women groups at the Kenya Agricultural Research Institute (KARI), says micro-insurance will cultivate confidence in farming.
“Unpredictable rains that occasion crop failure define the lives of smallholder farmers. Good years are remembered for their adequate rains, while bad years are defined by droughts or other adverse weather conditions,” she says.
Ms Gathii says agricultural micro-insurance will reduce the impact of severe weather and support increased investment in productivity.
“Insured farmers are able to buy certified seeds and invest in fertilisers. In the years following droughts, insured farmers are able to continue farming,” she says.
Agriculture Secretary Wilson Songa says legislation has to be fast-tracked to widen the scope of farmers’ access to insurance.
“Traditional agricultural insurance relies on on-farm monitoring of losses, evaluated through farm inspections. And since the transaction costs to insure one acre are similar to insuring a 200-acre farm, the premiums from the one acre farm would never cover the related transaction costs,” he says.
He roots for weather index based insurance generated through strategically placed weather stations that give a clear picture of draught risks.
“The weather stations measure the rainfall and these measurements are compared to an agronomic model specifying crops’ rainfall needs. If the needs are not met, farmers insured under that station receive a payout. If the needs are met,” he says.
He says this approach is working in Mexico, Morocco, India, Malawi, Rwanda and Tanzania, among other countries. But Mr Songa says farmers will be trained on micro-insurance schemes.
Syngenta Foundation chief executive Fritz Brugger says the programme has its risks, mostly related to poor takeoff.