Livestock insurance gains pace in push to boost farmers’ incomes

Cows and donkeys at an empty water trough at Ndovoini borehole in Ukasi, Kitui County. The livestock insurance scheme will be rolled out in the 23 counties located in arid and semi-arid lands. [PHOTO:PHILIP MUASYA/STANDARD]

Kenya: Kenya’s livestock sector is receiving renewed interest from Government and private sector players as global demand for red meat rises.

The trend, which is underpinned by an expanding urban, middle class in emerging markets in Africa, Asia and South America, is expected to boost livestock farmers’ earnings, while at the same time shielding them from exploitative cartels and cattle rustlers.

Kenya is also intent on not being left behind in the sector by regional neighbours like Ethiopia who have increased investment in livestock value addition and new markets.

 Global consumption

According to the Institute of Grocery Development (IGD), global consumption of meat is set to achieve a compound annual growth rate of 13 per cent between 2014 and 2020. Demand in Africa will surpass the average rate and hit 22 per cent. In Oceania, it is set to grow by 11 per cent, North America by 8 per cent and Europe by 3 per cent.

Agriculture, Livestock and Fisheries Cabinet Secretary Felix Koskei has previously said Kenya’s livestock industry has failed to reach its growth potential because it is not well organised, which has allowed cartels and cattle rustlers to thrive.

 Public-private scheme

To raise incomes in the sector, the Government plans to introduce an insurance scheme before the end of the first quarter of this year.

“The Jubilee Government manifesto provides that within two years, the Government will initiate and implement a public-private partnership insurance scheme to cushion livestock and crop farmers from risks, including disasters and effects of climate change,” Mr Koskei said. “To this end, a task force was established by the ministry that has prepared a concept note on the development of an agricultural insurance policy. A gap analysis has been undertaken to determine risk assessment capacities.”

He added that the scheme will be rolled out mainly in the 23 counties located in arid and semi-arid lands (ASALs). According to the Economic Survey 2014, the livestock industry contributes an average of Sh10 billion a year from 23.2 million animals. This works out to just Sh431 annually from each animal.

With the sector being a key driver of the country’s economic development, private players like insurers, banks and social enterprises are rolling out initiatives that would boost its profitability.

Last year, KCB Foundation launched an interest-free Sh1 billion revolving fund for livestock farmers in ASALs.

 

KCB Foundation Manager Rachel Gathoni said the fund is aimed at helping to commercialise the livestock industry.

“We were prompted to assist the farmers, owing to the increasing demand for red meat and other livestock products in the global market. For farmers to benefit from the fund, they must form co-operative societies that will guarantee individual borrowers. We expect the support to lead to high productivity.”

 Pilot project

The foundation has commissioned a Sh30 million pilot project in Baringo County targeting 50,000 farmers who are currently being organised into groups. Baringo is between 50 and 85 per cent arid.

APA Insurance launched a Sh1.15 billion insurance package to compensate pastoralists where livestock is lost during drought, while Takaful Insurance has a scheme based on Sharia law. According to the International Livestock Research Institute (Ilri), households with livestock insurance record a 50 per cent drop in distress livestock sales, and a 33 per cent drop in reliance on relief food.

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