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Sikhumbuzo Moyo, Senior Reporter
GOVERNMENT has launched a game-changing agricultural insurance product, Area Yield Index Insurance, which is expected to go a long way in de-risking the agricultural sector against climate change which has resulted in numerous natural disasters and huge financial losses to farmers.
The insurance scheme launch by the Ministry of Lands, Agriculture, Fisheries, Water and Rural Development on Tuesday came on the backdrop of yields from Intwasa farmers in the 2021/22 farming season dropping by a huge margin of 74 percent from 5,28 metric tonnes per hectare to 1,39mt/ha as a result of climate change effects.
Only about three percent of farmers in Zimbabwe take insurance largely because insurance in the country has always been perceived to be a product for the elite.
Area Yield Index Insurance was first developed in Sweden in the early 1950s and has been implemented in India since 1979 and in the United States since 1993. With this type of insurance, the indemnity is based on the harvested average yield of an area such as a county or district.
An indemnity is paid if the realised average yield for the area is less than the insured yield, regardless of the actual yield on a policyholder’s farm.
Zimbabwean farmers have always faced various risks such as veld fires, quelea birds attacks, heavy rains and cyclones.
According to the Food and Agriculture Organisation (FAO) drought has been established as the single greatest culprit of agricultural production loss. Over 34 percent of crop and livestock production loss in Low Developed Countries and Low Middle Income Countries is traced to drought with a loss of US$37 billion from 2008 to 2018.
Zimbabwe has been hit by three major cyclones in the last two decades with livestock amounting to over 50 000 being lost in the process.
Cyclone Eline struck in 2000; 20 244 livestock was lost while during Cyclone Dineo of 2017 killed 29 384 livestock. Cyclone Idai in 2019 led to 1 972 livestock being killed.
Speaking at the launch of the insurance scheme in Rushinga, Mashonaland Central on Tuesday, Permanent Secretary in the Ministry of Lands, Agriculture, Fisheries, Water and Rural Development Dr John Basera said in line with the National Development Strategy 1 (NDS1), regional, continental and international commitments, his Ministry instituted the Agriculture and Food Systems Transformation Strategy (AFSTS) as a parent policy for the sustainable transformation of agriculture in the face of climate change and variability by 2030 and to make the strategy a reality, it was imperative that the Government worked hand-in-hand with the private sector and development partners to come up with solutions to de-risk the sector which is indisputably the backbone of the economy.
He said while his Ministry has successfully launched a number of sector strategies and plans to steer agriculture back on track, little attention has been channelled to insurance.
Dr Basera said insurance has not been treated as a key input to ensure that risks experienced along the development trajectory are mitigated.
Bongani Ndlovu
Online Reporter