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Agricultural insurance: The savior of the post pandemic era

  • By admin
  • January 20, 2022
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It seems like Kenya’s agribusiness sector is always under siege. Over the years, the agricultural industry has faced many unending challenges. Despite this, it is still the backbone of the economy and will require heavy investment and protection if it is to remain that way.

The most recent attack on the agricultural sector is the Covid-19 pandemic. This global disaster has affected multiple industries within the country. Farmers and direct investors of the business were also hit. An ongoing study by researchers Venu Aggarwal and Katie Reberg that started in June 2020 showed that 26% of farmers lost their income source due to the pandemic’s effects.

Progress in opening up and getting back to normal life however showed a 44% improvement in the agricultural sector as of February 2020. With multiple vaccines working effectively globally, it seems that Covid-19 will no longer be a threat to farmers. The Source: Pixels.com 13 percentage is destined to improve, and this would be so if not for an existing and ever-growing danger that has already brought losses to farmers in the country.

Climate inconsistencies are slowly but regularly lowering this percentage. The last few years have recorded changes in temperatures, rainfall patterns, and seawater levels. Unfortunately, the conversions are expected to keep coming. These unpredictable changes have and will continue to affect agricultural production negatively.

The immediate impact falls on farmers and those economically invested in the agricultural sector. Every other day, farmers wake up to count losses as nature’s hands take more than it gave. Farming communities in Kenya suffer badly, and this spirals down to economic instability. The long-term effect sees a strain in the food supply as population and urbanization are ever-expanding.

So what is the solution? The obvious answer would be containing climate changes. However, it is widely known that climate change control is a joint effort around the globe that would take years to achieve.

The practical solution would be agricultural insurance. It is the antidote to the risk that farmers face. It is also what will make lending to the farming sector less risky for banks and other organizations. There is no greater time to consider this insurance than now.

37 out of 47 counties in Kenya will be accessing a state-backed financially supported crop insurance scheme.”

 The scheme will cover smallholder farmers against climate-related losses. Since small farmers produce up to 80% of the food supply in Africa, the project is a creative and successful approach to protecting agribusiness in the country. This scheme is a welcome intervention because agricultural insurance failed in sustainability. However, with governmental involvement, it is a stable solution.

The crop insurance scheme previously only backed 28 counties and had six underwriters. However, with expansion into other counties, the state is recruiting more insurers to support the program. So far, the program has compensated 25,000 smallholder farmers in August of last year, releasing Kshs. 117.5 million in compensation. The future looks bright for this endeavor, and with proper education to farming communities, perhaps the country can truly get back to normal.

 

Written By:

John Ndirangu

Managing Director-Mwangaza Roshanee Insurance Agencies