Govt considers climate-proofing farmers

01 Dec, 2019 - 00:12 0 Views
Govt considers climate-proofing farmers

The Sunday Mail

Fatima Bulla
Gender and Community Editor

An insurance framework that insulates vulnerable farmers from the vagaries of climate change is currently being worked on by the Insurance and Pensions Commission (IPEC), raising hopes the agricultural sector might cut back on losses experienced as a result of unpredictable weather conditions.

More than two million subsistence and smallholder farmers could potentially benefit from the proposed framework.

The new weather-indexed framework will insure against specific weather calamities, while payouts will also be triggered when rains fail to reach the expected threshold.

The initiative, which falls under the Micro-Insurance Framework established in 2017, is targeted at low-income populations in order to achieve financial inclusion.

Usually, insurance companies limit or do not cover for “acts of God”, which include natural disasters that are outside human control.

IPEC’s public relations manager Mr Lloyd Gumbo said the framework is presently being developed with support from technical partners.

“The framework provides for cover based on weather forecasts, and when risk materialises, farmers are compensated. We are currently engaging technical partners to develop the framework,” said Mr Gumbo.

“This form of insurance is important seeing that Zimbabwe is agro-based and our farmers are highly at risk, especially with the effects of climate change already having great impact,” he said.

The move is underpinned by Government’s National Financial Inclusion Strategy launched in 2016, which identified insurance as one of the critical components in the financial services sector.

It was inspired by findings from a Finscope Consumer Survey whose outcomes revealed that 23 percent of Zimbabwe’s adult population was financially excluded.

And of that percentage, more than three-quarters invested more in funeral cover than any other form of insurance.


Zimbabwe Farmers’ Union executive director Mr Paul Zakariya said knowledge on insurance, particularly among smallholder farmers, was limited.

He said loans and inputs provided to farmers needed to be covered against the effects of adverse weather conditions.

“There are rudimentary products in the market which do not indemnify farmers; they are not anywhere near weather-index insurance. So we need a proper concept to provide protection for our farmers.

“It must be explored to minimise risk to climate change and go beyond a product farmers enjoy,” Mr Zakariya said.

According to the International Panel on Climate Change, Zimbabwe is one of six countries set to be hit hardest by adverse weather in the coming years as temperatures in the region soar above the global average.

The Food and Agriculture Organisation (FAO) revealed that Zimbabwe, together with its neighbours Malawi, Mozambique and Zambia, experienced the lowest rains in almost four decades in the 2018/2019                                 season.

Natural disasters such as the 2015/16 El Nino weather phenomenon have also exposed the country to food insecurity, which has significantly affected farmers’ incomes.

Some insurance companies such as Old Mutual provide weather-indexed cover in Zimbabwe.

Premiums are calculated based on the location of the farming activity, possible losses at the phase affected by the weather peril and hectarage used.

Regional trend

Zambia is also pursuing a weather-indexed insurance that is expected to support 400 000 farmers by the end of the year.

The intervention would likely cushion farmers who cannot afford traditional insurance packages.

It would also encourage investment.

A research paper done in Kenya titled “Small farmers’ preferences for weather-index insurance: Insights from Kenya” revealed that smallholder farmers struggled with understanding financial services, which, in turn, undermined their confidence.

It further discovered that offering contracts to small groups rather than individual farmers could increase insurance uptake.

The research pointed out potential benefits such as making claim payments based on the realisation of an objectively measured weather variable such as rainfall that is correlated with production losses.

“Neither the insured farmer nor the insurer can easily manipulate rainfall measurements, which reduce issues of information asymmetry. Moreover, instead of reducing effort to increase chances of compensation, farmers with WII (weather-indexed insurance) actually have an incentive to make the best farming decisions.

“In comparison with traditional insurance, WII is less expensive to administer, which can lead to more affordable contracts and faster payments to farmers, who often need the funds for timely planting in the subsequent season,” the research revealed.

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