Crop insurance: the panacea

Lazarus Sauti

Muchaneta Zarire, a small-scale farmer from Buhera, trusts agriculture is her solitary weapon to battle servile destitution, but natural hazards are pulling her into the mud.

“Agriculture is a risky business and just like many farmers in this country, I am facing production risks that make my incomes volatile from year to year. These risks include yield losses due to bad weather and crop infections,” she said.

Zarire, therefore, pleads for government funding and relief to lift her from abject poverty.

“For the past five years or so, this area has been assaulted by drought and unpredictable weather patterns forcing me to wander like a soul in pain scrounging for food for my family,” she said.

“I am therefore begging the government to support me and other small-scale farmers in this area or else we are all going to perish.”

Agriculture technician, Ronald Chimunda, says without adequate support, Zarire and other small-scale farmers will continue swimming in poverty.

He, along these lines asked the government and its development partners to be proactive in securing crop farmers, especially those in provincial regions, whose fields are almost entirely rain-fed.

“Supporting farmers with inputs and subsidies is good but fragmented without an insurance package appended to it,” he said, including that the package will assist farmers with managing the dangers related to unpredictable climate patterns.

Chimunda added that the government should introduce crop insurance, a risk management tool that protects farmers in times of low production so that they are able to meet their financial obligations and safeguard the agricultural sector.

“Crop insurance is good for farmers like Zarire as it helps protect farmer income in times of volatile production, for instance when crops are damaged by floods or drought,” he said.

Since crop insurance pays farmers who raise major commodities, Chimunda urged the government and insurance companies to also come up with packages for small-scale farmers like Zarire.

Addressing journalists at a ZimSelector Journalists Insurance Mentorship programme at Holiday Inn Hotel in Harare last year, Old Mutual senior business development manager, Immaculate Musonza, said her organisation is offering agriculture insurance to small-scale farmers like Zarire.

“Our products, divided into three broad categories: crop insurance, livestock insurance and agri-assets (farm buildings, farm equipment, and machinery), are intended to cover any agriculture operation or activity in the country,” she said.

For insurance purposes, asserted Musonza, Old Mutual focus on the negative impact of the following perils: fire, hail, pre-germination, frost, field to the floor (storage and transit risks) and drought and too much rain (weather index).

She clarified that weather index is a streamlined type of insurance, where payments are made based on a specified weather “index”, for example too much rainfall or drought.

“The insurance protects the value of farming inputs,” Musonza said. “If there is a drought or too much rainfall in an area, the insurance policy will pay out a portion of the insured value of inputs depending on the damage caused; a payment is triggered by the length of the dry spell or of excessive continuous rains.”

She conversely said most farmers in this country only insure their crops when they speculate that they will incur losses and in this way asked them to always take insurance for their products in the event that something terrible occurs.

Financial specialist, Precious Santana, noted that Zambia introduced crop insurance at government level and urged the government to do the same to enhance food security in the country.

She likewise said the Federal Crop Insurance Corporation, a wholly-owned government corporation managed by the Risk Management Agency of the United States Department of Agriculture, provides US farmers and agricultural entities with crop insurance protection.

“The Federal Crop Insurance Corporation advances the monetary solidness of agriculture through a sound arrangement of crop insurance, as well as giving the way to the exploration and experience accommodating in conceiving and building up such insurance,” she said.

“Our policymakers should thus think about an insurance package that is mandatory to all farmers in the country, especially small-scale ones like Zarire,” she said, arguing that a financially enabled farmer is a productive farmer, but crop insurance is the missing ingredient in the government’s farming financing model.

A research paper titled “The Impact of Crop Insurance on the Economic Performance of Hungarian Cropping Farms”, also noted that crop insurance schemes are a potential instrument to adapt with income losses through repayment instalments and in this manner stabilise income and economic performance of farms.

“The support of insurance use would be possible through direct subsidies for insurance premiums, through providing reinsurance, or through more indirect support by enhancing research and development of insurance products and providing an institutional framework for the agricultural insurance market,” the paper noted.