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Esther Tom
SMALLHOLDER farmers can finally attain peace of mind even under adverse weather situations, thanks to the introduction of an agriculture index-based insurance scheme set to play a key catalytic role in strengthening their resilience to potentially devastating climate-related disasters such as droughts, floods, pest and disease infestations and dwindling groundwater supplies.
Coming courtesy of the collaborative efforts by the Insurance and Pensions Commission (IPEC) and the International Finance Corporation (IFC) a member of the World Bank Group, the scheme is designed to boost smallholder farmers’ food security, stabilise rural economies and strengthen the resilience of the food systems in the face of the growing climatic challenges that threaten to disrupt productive agriculture. Most smallholders depend wholly on rain-fed agriculture.
Farming insurance is an important tool in climate risk management that can help ensure smallholders are able to plant again the following season even if crops fail in the current one, and encourage them to take risks to invest more in their farms even when the climate is so unpredictable.
IPEC director of Insurance and Micro-insurance, Mrs Sibongile Siwela said the agriculture index-based insurance project was designed to facilitate and aid farmers in getting insurance that covers losses from climate-related risks at the same time improving the uptake of agriculture index insurance.
“The project’s expected outcome is the improved uptake of agriculture index insurance, which will cover losses against climate change related risks such as drought, floods and hail,” said Mrs Siwela.
A well-designed insurance programme can help improve farmers’ resilience, access to finance and high-quality inputs. The initiative will provide the much-needed support to farmers who are vulnerable to the impact of climate change, thereby capacitating them to safeguard the agriculture sector.
On successful completion of the project, insurance entities would be better equipped to offer agriculture index-based insurance solutions while IPEC would have improved capacity to regulate the products from a technical viewpoint and have a robust regulatory framework for the protection of policyholders and development of the sector.
Mrs Siwela further observed that the project would offer smallholder farmers low premiums, while making the product available to all farmers to ensure stability. To achieve this, insurers will collaborate with farmer groups and organisations.
“The project targets smallholder farmers and premiums will be low to encourage upscaling. The products will be open to any farmer but to ensure sustainability and upscaling, insurers will be working with farmer groups and organisations,” she said.
Zimbabwe Commercial Farmers’ Union (ZCFU) president Dr Shadreck Makombe commended the initiative and urged smallholder farmers to be alive to the need to keep their products insured, thereby improving on inputs accessibility and financing.
“This is a noble venture, which will all assist in the alleviation of many issues associated with losses incurred by the farmers now and then,” he said.
On the one hand, technology will also help determine insurance playouts through the use of pre-agreed indices that determine whether farmers have suffered losses or not. The use of technology therefore helps reduce product costs for insurers through limited human intervention and ultimately aid in the provision of low-cost insurance products to smallholder farmer communities.
The Government through the Ministries of Finance and Agriculture is working with IPEC to promote the adoption of insurance to support farmers.
Online Reporter