* Any views expressed in this article are those of the author and not of the partner organisations producing zilient.org.
Making farms more productive and profitable is in everyone’s interest - it is a vital contribution to improving global food security. But the challenge of intensifying agriculture in a sustainable way is growing rapidly in the face of rising temperatures and changing climates.
There are many tools available to aid this effort. Some of these are direct farm inputs, such as higher-yielding seeds, slow-release nutrient-rich fertilisers and drip irrigation. Others address additional aspects of agriculture, such as information and financial services.
However, better tools cost money upfront – and often a significant amount. Understandably, smallholders are reluctant to invest in new farming practices if all the burden of risk is on their shoulders. A drought, flood or other disaster can leave them empty-handed and in debt.
Large commercial farmers have long been able to insure themselves against weather-related losses. In the past, however, insurers found it too expensive and complicated to protect many smallholders.
Of the 450 million such farmers worldwide, 90 percent plant less than two hectares. Limited incomes and high transaction costs have excluded them from cover.
But an initiative called Kilimo Salama in East Africa has shown that insuring smallholders is not only possible, but effective too. We shall be sharing the Syngenta Foundation for Sustainable Agriculture’s experiences with researchers and insurance professionals during the U.N. climate talks in Bonn this week.
Continuing commitment to insurance is part of our efforts to help smallholders run their farms as productive and profitable businesses.
Launched by the Syngenta Foundation in 2009, Kilimo Salama lowered the cost of agricultural insurance by automating key processes. For example, by using digital weather stations we avoided the need for expensive field assessment visits.
The station data indicated which smallholders had endured crop-damaging weather. Kenya’s mobile money service M-Pesa then enabled quick and simple payouts directly to their cellphones.
The project was so successful that by 2013, the sum insured had reached over $12 million, and payouts amounted to more than $370,000. The following year, we turned Kilimo Salama into a company, ACRE Africa, to scale up insurance even further.
As of 2016, more than 1 million farmers in Kenya, Tanzania and Rwanda were insured against weather risks, protecting potatoes, cashew nuts, maize and coffee. One million smallholders were therefore able to rest easy in the knowledge that whatever a changing climate threw at them, their work was not in vain.
ACRE Africa, a service provider working with local insurers and acting as an insurance surveyor in Kenya, is now one of the few sources of smallholder insurance expertise in sub-Saharan Africa. We have not achieved this alone. Our partners include banks, mobile phone operators, seed companies, insurers and reinsurers.
As a result of this expansion, we are now focusing on smallholders’ insurance needs in Asia. Our aim is to help lift the weight of risk from the shoulders of millions more farmers.
By providing affordable, carefully tailored insurance, we empower more producers to invest in their businesses. When farmers know they are not gambling with their livelihoods, they can afford to be more ambitious. This is essential, because smallholders already produce 70 percent of the world’s food, and demand is rising daily.
Worldwide, there remains huge further scope for shifting the burden of risk from smallholders’ shoulders. Given our experience, we are optimistic that we have the means and the insights to ease this pressure. In the interests of global food security, we encourage others to follow our lead.