Insurer wipes sweat off farmers’ brows

By Peter Orengo

Good years in Kenya are mainly remembered for adequate rainfall while bad years are defined by drought or other adverse weather conditions.

Traditionally, farmers minimised investment in farm inputs in order to reduce their exposure to vagaries of weather. As a consequence, they remained in the vicious cycle of low productivity and poverty.

Crop insurance is considered essential to agriculture in developed countries but has been largely unavailable to farmers in third world countries, in part because of the costs of administering micro policies.

According to Fritz Bugger, the Syngenta Agricultural Insurance Development Expert, that is pioneering agricultural insurance, conventional crop insurance requires field inspections at the time the policy is issued and follow-up visits to confirm damage.

"Such procedures can be cost-effective for large farms, but are far too expensive to be practical in places like rural Kenya, where most farming is done on small plots outside in villages," says Bugger.

He adds that while micro-finance has taken off in many poor countries, insurance on agriculture has not succeeded because it offered no immediate benefit to farmers.

Also, farmers’ lack of trust in proposed insurance schemes has posed a significant barrier, according to UAP Insurance Managing Director James Wambugu.

"Previous experiments in insurance for smallholder farmers have relied on subsidies or funding from international aid institutions, leading to questions about their ability to be scaled up and be sustainable over time," Wambugu says.

Payouts are triggered by relatively inexpensive index system tied to local weather conditions.