Agric insurance brings stability to farmers

 

Lazarus Sauti

EVERY time climate-induced drought wrecks Zimbabwe, the media is saturated with pictures of wilting crops and dry pastures strewn with carcasses of livestock.

These pictures confirm that climate change is affecting farmers as they are losing their crops and livestock.

Armyworms invasions, pests, and diseases are further compounding the problem for farmers, especially smallholder ones who contribute over two-thirds of the total agricultural output in the country.

Unfortunately, they are more vulnerable to climate risks as they do not have the resources to take preventive measures or absorb shocks.

“Rainfall variability, harsh weather conditions, and chronic droughts have badly affected most families here in Hwedza,” said Sarah Makoni, a smallholder farmer in Gonese, a village in Hwedza District in Mashonaland East Province of Zimbabwe.

She added that most smallholder farmers in her area and other provinces like Manicaland, Masvingo, Mashonaland Central, Matabeleland North, and Matabeleland South depend on rain-fed agriculture, and as such climate change is rapidly threatening sustained agricultural productivity, food security, and socio-economic development.

“We have lost our livestock, thanks to climate-induced droughts. Our livestock was exposed to diseases. Though we used various indigenous techniques like sanitation, vaccination, and early treatment of diseases, we failed to handle catastrophic losses.”

In its recently published 2020 Rural Livelihoods Assessment Report, the Zimbabwe Vulnerability Assessment Committee (ZimVac) said the economic recession and Covid-19 also pushed more than 5 million Zimbabweans in rural areas into abject poverty.

ZimVac, in partnership with the World Food Programme (WFP), United Nations Children Fund (UNICEF), Food and Agriculture Organisation (FAO) added that these people require 807 232 tonnes of grain to be food secure.

The Joint Meeting of the Southern African Development Community (SADC) Ministers responsible for Agriculture and Food Security, Fisheries, and Aquaculture also said Covid-19 and climate-induced droughts pushed fragile member-states closer to the abyss of famine.

The Council of Ministers, therefore, urged member-states to work towards the implementation of resilience-building initiatives, improving early warning and response mechanisms, and contingency planning to lessen the impacts of food shortages.

“SADC member-states should expand social safety nets and social protection measures for the poor and vulnerable, as well as adopt and embrace risk transfer strategies in form of agriculture insurance for crops and livestock,” said the Council of Ministers.

Launching a virtual Insurance and Pensions Journalists Mentorship 2020 Programme organised by the Insurance and Pensions Commission (IPEC) and National Social Security Authority (NSSA) recently, IPEC Commissioner, Grace Muradzikwa said agriculture insurance for crops and livestock brings stability in production by protecting farmers from the vagaries of the weather and climate.

“Agriculture insurance for crops and livestock helps to allay the impact of systemic risks by providing the much-needed protection as well as contributing to the timely recovery in case a disaster strikes,” she said.

“This would help keep smallholder farmers out of poverty and enable them to invest in their future.”

Muradzikwa further said her organisation approved Prescribed Asset (PA) status – an investment in projects of national importance – towards agriculture financing worth Z$250 million this year.

“This approval is consistent with the government’s policy to increase crop and livestock production and help Zimbabwe to become an Upper Middle Income Economy by 2030,” she added.

Insurance Council of Zimbabwe (ICZ) Executive Officer, Tendai Karonga said although Zimbabwe’s economy is agro-based, with agriculture contributing about 17 percent to the Gross Domestic Product (GDP) and about 60 percent of raw materials to the manufacturing industry, the low uptake of agriculture insurance for crops and livestock is exposing citizens to food shortages.

“Despite the agricultural sector being one of the major drivers of the economy, its consumption of insurance service is very minimal contributing 1.45 percent to the Gross Premium Written (GPW) for the period January to June 2020,” he said.

Karonga added that lack of insurance products that address the needs of smallholder farmers, mistrust in insurance services, and reliance on traditional self-insurance in risk and loss management are some of the factors affecting the uptake of agricultural insurance in the country.

“Thin profit margins in the sector, particularly for small-scale commercial and subsistence farmers and lack of knowledge on the benefits of insurance and risk management services, are other factors inhibiting the uptake of agricultural insurance for crops and livestock,” he added.

Makoni is skeptical about insuring her crops and livestock, citing inadequate information on agriculture insurance and its importance.

She thus encouraged stakeholders in the agriculture insurance sector to increase public awareness campaign activities on their products and services.

ICZ – an independent self-governing association of short-term insurers and reinsurers in Zimbabwe duly registered by IPEC – said it is carrying out public awareness and educational campaigns on insurance products and services as one of its key activities.

“We are urging insurers to offer community-based agriculture insurances for the smallholder farmers, taking advantage of economies of scale concept,” Karonga said.

He added that IPEC, as the regulator of the insurance sector, is also working on a framework to introduce weather index-based agriculture insurance aimed at boosting the uptake of agriculture insurance for crops and livestock in the country.

For agricultural extension officer, Lissom Ngwazani, agriculture insurers should increase their branch network in all farming areas to enhance the uptake of their products and services.

“Communication is key,” he said. “Agriculture insurers should invest in communication and solicit feedback from farmers on a continued basis to consistently meet customer needs and enhance service delivery.”

Ngwazani also urged agriculture insurers to collaborate with financial institutions that provide agricultural finance to boost efficiency in service delivery.

“For instance, as financial institutions assess financed agricultural projects, they can also be collecting data relevant for insurance underwriting; at the same, insurance premiums can be paid through the banks and policies issued within bank premises.

“Insurers and financial institutions can thus benefit from each other’s client base,” he added.

To Information Technology (IT) expert, Mike Sakupwanya, the use of new media tools in promoting agricultural insurance has the potential to facilitate client uptake, reduce transaction costs, and improve the efficiency of the insurance process.

He, therefore, urged smallholder farmers like Makoni and others in the country to take advantage of mobile phone-based insurance products such as Moovah Crop Insurance cover and Moovah Livestock Insurance cover respectively.

Moovah Crop Insurance covers crop destruction by windstorms, uncontrollable pests, stray animals, fire, and frosts while Moovah Livestock Insurance covers livestock from death, accidental injuries, or theft.