Covering crops amid disasters


By Frank Phiri:


Mercy Thom is among smallholder farmers in Mchinji District who are feeling the pinch of erratic weather patterns precipitated by changes in the climate.

The food security threat her household faces has compelled her to move into a frantic search for options that will ensure hunger stays clear.


“I now want to get more knowledge on crop insurance so that I can be covered in times of disaster such as the one I experienced last year,” Thom says.

All she had known about insurance had to do with covering vehicles.

“I had never heard about crop insurance. Last year, it did not rain for 25 days in my area during the rainy season, so I only harvested two 50-kilogramme bags of maize compared to an average of 10 bags I would harvest during the past growing seasons,” Thom adds.


As climate change continues to take its toll on various sectors including agriculture, stakeholders are brainstorming ways of cushioning the impact of the global problem.

Crop insurance, designed to reduce the impact of droughts and other natural disasters, is now becoming common in conversations in the agriculture sector.

Not long ago, it was impossible to insure a smallholder farmer in Malawian. There were many risks, lack of data, ignorance about insurance and a general lack of interest from insurers.

The situation is now changing as smallholder farmers are becoming knowledgeable about this panacea.

It is possible to insure crops across the nation if the farmers individually, or through cooperatives, are willing to adopt the solution.

Experts have touted crop insurance as the way to go as far as fighting effects of climate change is concerned.

In a new insurance system, farmers will be compensated for yield losses in key crops such as maize, pigeon peas, soya beans, groundnuts, tobacco and sugarcane.

A consortium of eight local insurance companies led by Nico Insurance Company, supported by Pula advisors, an international technology firm based in Kenya that provides the data, will make the compensation possible.

Pula partners with insurance companies, governments and loan providers to bundle insurance with the inputs farmers need such as seed, fertiliser and credit.

“Our mission is to empower smallholder farmers in emerging markets by providing agricultural insurance that protects them against climate risk, weather shocks and pests or diseases. Agriculture is the backbone of Malawi’s economy and farmers are the prime stakeholders in the agriculture sector.

“Therefore, we should not just watch when they are being disturbed by effects of climate change; we should join hands and provide shelter for them. Thus, crop insurance is the shelter they have been looking for,” Pula Commercial Manager, Joshua Wamae, says.

So far, the firm has reached out to 11 countries and 1.7 million farmers, monitoring the whole farming cycle to be alert on any possible disaster, shock and risk that try to paralyse any agricultural activity.

For example, when there is insurance for seed, Pula monitors rainfall using satellite data. If rain is insufficient in the first 21 days, farmers receive a mobile phone message voucher for replacement of a bag of seed to replant.

Thom says she would have benefited from the arrangement if she had known about it. Now, she is keeping her fingers crossed that the weather will not be bad for her crops.

However, insurance will still bring hope in her household even in the event that her fears turn real.

According to Wamae, for insurance for seed and fertiliser, at the end of the season, Pula does yield measurements according to agro-ecological zones.

“If farmers’ yields were below the average for their defined area, they receive a cash pay-out or replacement product [short message service] voucher to pick at an agro-dealer,” Wamae says.

At the end of the season, trained enumerators measure yield levels for each agro-ecological zone. With this information, farmers will receive compensation if yields in a specific agro-ecological zone are below a determined trigger level.

Besides covering risk, the Pula firm platform also makes it easy for banks to provide loans to smallholder farmers whose risks will now be covered by local insurance companies.

Malawi once experimented crop insurance with an African Union-backed insurance company in 2015/16 but the government suspended its services after the nation suffered drought and poor compensation due to inadequate technology.

The government made premium payments internationally without any participation of local insurance firms in the venture.

Peacock Seeds Managing Director, Felix Jumbe, who has also worked closely with smallholder farmers in his former capacity as president of Farmers Union of Malawi, says insurance is important and that Malawi needs to adopt it in its entirety.

He said insurance improves climate resiliency, food security and household savings.

Pula insurance pay-outs are said to be key in stabilising household incomes during droughts and severe weather events.

Experts say crop insurance may lead to improved food security among many farmers in disaster-prone areas in Malawi.

Recently, 80 percent of insured Kenyan households used some of their insurance pay-outs to purchase food and escaped hunger.

“When I grew my crops without insurance, it was a big risk. It was 50-50 in terms of whether I would harvest enough or not. Now, I am 99 percent because if I don’t harvest according to expectations, my insurance pay-out will cover everything,” says Kenyan Anastasia Ngala who benefited from Pula’s crop insurance system.

In Malawi, Pula has started with 26,000 farmers in its database. The number is likely to increase as registered farmers are spreading the message to others about the initiative.

Insurance Association of Malawi (IAM) is also hopeful more and more Malawians will take insurance as an important aspect of their lives.

“We want to educate people in rural areas about the need to insure their property. We also want to bundle insurance products with loans by partnering with financial institutions,” Master Mbale, a member of IAM, says.

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