KENYA: Taking the risk out of farming – Farmers can now take out insurance against weather-related crop failure
NAIROBI, 5 March 2010 (IRIN): Just as purchasers of electronic goods can buy extended warranties (garantier) in case their TV goes wrong, farmers in parts of Kenya can now mitigate (lindre/nedsætte) the risk of weather shocks by insuring their inputs at the point of sale.
The programme, dubbed “Kilimo Salama”, Swahili for “safe farming”, was launched on 5 March in the Rift Valley provincial capital, Eldoret. It takes advantage of the ubiquity (allesteds nærværende) and multi-functionality of mobile phones in Kenya.
– Every time a farmer buys seeds, fertilizer, or other agro-chemicals, they can insure them, even for those who buy in very small quantities, Rose Goslinga, the coordinator of the Agricultural Index Insurance Initiative at the Syngenta Foundation, told IRIN.
Policies (policer), costing 10 percent of the inputs pur-chased, split equally between farmer and manufacturers, who hope to increase sales as a result, will be sold by agricul-tural suppliers armed with mobile phones loaded with dedicated software.
– To insure a farmer, the stockist first scans a code with all relevant product information via the phone’s camera; then he selects the weather station closest to the farmer’s fields, said Goslinga, adding:
– Finally, the stockist enters the farmers mobile number and sends the registration to our server. An immediate text message sent to the farmer provides him with his policy number and insurance confirmation.
– You have to make it very easy for the farmers to try the insurance, she said, adding that the main administration costs incurred were sending out the text alerts.
Weather stations monitor rainfall amount and distribution in the field, which are then compared with the crop’s water requirement vis-à-vis historic rainfall patterns.
In case of crop failure due to drought or too much rain, farmers will receive a text message informing them of a payout, which they will directly receive through M-PESA, a cash transfer service run by telecoms operator, Safaricom.
Index-based insurance “pays out in events that are triggered by a publicly observable index, such as rainfall recorded on a local rain gauge”, notes a December 2009 International Food Policy Research Institute (IFPRI) report, “Innovations in Insuring the Poor”.
As the insurance is based on an independent trigger that cannot be influenced by actions of the farmer, it reduces the likelihood of insured individuals taking greater risks.
However, there is a basis risk in that payouts may not always exactly match the losses farmers experience, which can be difficult for farmers to understand, noted IFPRI.
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