Building agricultural resilience among smallholder farmers through crop insurance

In Kenya, the agricultural sector generates approximately 24% of annual GDP and approximately 55% of revenue from exports. However, farmers face a lot of risks given that agriculture is a climate-sensitive activity therefore highly vulnerable to the impacts of climate change. Due to lack of enough capital and lack of adequate mechanisms to mitigate or transfer these risks, coupled with other pressing bills, farmers often underinvest in their farms after facing a catastrophe.  

Jacinta Muli is one such farmer, she plants maize along other crops like beans on her farm. Jacinta, a mother of seven explains that every often she diverts funds from other domestic sources to be able to invest in her half an acre land. As a farmer in Machakos where rainfall is scarce, she explains that, every time she plants, her biggest fear is drought.

However, weather related risks are beyond her control and usually whenever drought occurred in the past, she had no alternative. In 2019, she was introduced to crop insurance through ACRE Africa’s village-based change agent (Village Champion). “I was convinced that it is a good product since it was being sold by a fellow farmer from my neighborhood who had also insured his farm.” Said Jacinta.

She adds that besides being asked to purchase insurance for her farm, they were trained on the need for insurance and other key topics like good agricultural practices, record keeping and risk management. “I have always known insurance to be a very problematic investment and complex to understand but this one had no fees attached to the extension services I received and no complex paperwork for me to fill and sign. Everything was done via my feature mobile phone and I submitted the payment via MPESA.” This was a very different experience compared to the other traditional insurance products that she terms to have been unaffordable and inaccessible.

Following a bad harvest in 2019, Jacinta decided to spare some KES. 200 in 2020 for micro insurance. She later topped up the amount with an extra KES. 50 since that is all she could afford. “Every now and then I have some money but mostly it is less than ksh100, the ACRE Africa product allows me to use my spare cash to pay for the product”. I made the payments so easily as they allowed me to insure only what I could afford”.

Jacinta Muli on her farm in Machakos County

Asked why she chose to get a cover for her crops, Jacinta, like many other smallholder farmers stated that any payouts from a bad weather experience during the season will cushion her from fully carrying the loss risks thus have the muscles to re-invest in the farm.

According to a report by World Bank, shows that by 2015, almost 78% of farmers in Kenya are smallholder farmers who just like Jacinta, face agroclimatic risks such as drought and excess rainfall. By dialing a USSD code on their phones; *800# farmers can now register and access a number of solutions from ACRE Africa. Among them, purchase of insurance, access to insured farm inputs, input financing and farmer advisories specific to the crop grown and weather conditions of the farmer’s location.

Through funding from Alliance for a Green Revolution in Africa (AGRA), Innovate UK, World Bank, International Development Research Centre (IDRC)and Australian Centre for International Agricultural Research (ACIAR) ACRE Africa has been able to train over 500 village champions across 15 Counties in Kenya.  The village champions, in return, transfer the skills and knowledge to their peers reaching almost 200 farmers per champion. This has helped change the perceptions of rural farmers on agricultural insurance and increase uptake. All these efforts are geared towards achieving the Sustainable Development Goals 1 and 2 by ensuring doubled agricultural productivity and incomes of smallholder farmers, end of malnutrition and contribute to agricultural research and innovations, in order to enhance food security in Africa.