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Joseph Ibeere has been a smallholder farmer for over 30 years. The venture being his only source of livelihood, he has ended up securing loans to cushion himself from drought effects, that destroy his crops from time to time. 

Ibeere is not the only farmer who has been surviving on loans to keep up with their farming activities.

Most smallholder farmers in Kenya depend on loans as they lack access to agricultural insurance.

This is despite the fact that agricultural insurance can be a sustainable approach to unlock investments in agriculture for smallholders and improve their resilience and productivity.

“Most smallholder farmers don’t insure their crop because insurance has, traditionally been associated with large scale farmers.

Smallholder farmers need to change this mindset since there are other benefits that come along with an insured farm,” says Denis Kiogora of APA Insurance Limited in Meru county. 

Agricultural insurance, Denis says, not only protects farmers against financial risks posed by weather unpredictability, but it also has been widely advocated as a tool to help farm households escape poverty traps and invest in climate-smart high-productivity agriculture activities.

It is against this background that Agriculture and Climate Risk Enterprise Limited (ACRE) Africa initiated an insurance preparedness programme for farmers in 2018 with an aim of addressing the problem of low agricultural insurance uptake. 

Farmer training 

Funded by the Alliance for a Green Revolution in Africa (AGRA) through the ‘Financial Inclusion for Smallholder Farmers in Africa Programme (FISFAP), the program uses village champions to conduct training in the field of agricultural risk management and insurance. 

The programme has seen Ibeere and 43,000 other smallholder farmers benefit from not only training, but also a crop insurance cover, which uses both Weather Based Index (WBI) as well as Picture-Based Index (PBI) to unlock investments in agriculture for smallholders and improve their resilience and productivity.

The project is being implemented across 13 counties, including Bungoma, Busia, Kisumu, Kakamega, Uasin Gishu, Meru, Embu,Tharaka Nithi, Elgeyo Marakwet, Trans Nzoia, West Pokot, Makueni and Machakos counties.

“Initially I used to get about eight 90 kilogrammes bags of maize from my one-acre maize farm, but since I embraced this cover I am getting at least 15 bags from the same acreage due to the integrated risk management approaches we are being trained to utilise in our farming activities,” says Joseph. 

The programme leverages on the local communities’ trusted social structures to promote uptake of insurance services through development of village-based change mechanisms to lead sustainable risk management awareness campaigns and distribute insurance products designed for smallholder producers in the rural communities.

“This cover is a commoditised weather index crop insurance cover distributed in the form of a scratch card that we developed to protect smallholder farmers against the risks of drought and excess rainfall,” says George Kuria, ACRE Africa, CEO. 

The product is designed in such a way that farmers can buy the value of insurance they can afford or wish to insure at the time of purchase.

The insurance comes inform of scratch cards, similar to airtime, and can be bought from either contracted ACRE champions (those who train other villagers about the product) or promoters (contracted agro-dealers), alone or along with other inputs, such as fertiliser and seeds.

“My three acre farm is in Tigania West in Meru county. In this area, we receive low rainfall, and most of the time our harvest is affected,” says Ibeere, adding “With no insurance, I had been bearing the weight of these losses alone, but now I am a happy farmer,” he adds.

Since 2017, Ibeere has been insuring his one acre maize farm for about Sh1,000. Every time his crop is affected by either extreme rainfall or drought, he is always compensated.

Last season alone he received about Sh7,500 after losing his entire crop to drought. This money has helped him buy certified farming inputs for this season. 

Satellite monitoring

According to Kuria, the cover offers farmers insurance that protects them against climate-related risks for crops.

Once a farmer registers, ACRE Africa begins to monitor their farm via satellite and weather stations data.

Payouts are triggered by low rainfall or lack of it and one needs not to file any claims since the whole process is automated.

This will be determined by satellite data and complemented by weather station data.

“Index insurance, is a type of insurance service that makes payouts based on a predetermined index, such as rainfall level for losses resulting from weather and catastrophic event rather than on-farm visits.

It provides cover against specific perils across a defined area rather than at the farm level.

Smallholder farmers are increasingly using  index insurance services, as a safety net against crop or livestock losses,” he says.

Kuria adds that the company decided to venture into index insurance because this could reduce some of the problems associated with traditional, indemnity-based insurance program, which have, for a long time, made smallholder farmers be overlooked by insurance providers.