Farmers urged to take insurance in the face of climate change
INSURANCE is critical in mitigating financial losses associated with climate change disasters that affect agricultural activities, providing a safety net for vulnerable communities, an insurance firm has said.
Climate change increasingly threatens food security and rural economies, making it essential to develop comprehensive insurance programmes specifically tailored to farmers’ needs.
Many farmers, particularly those in vulnerable communities, are unaware of the various insurance options that can protect them against climate-related risks and other uncertainties.
Investing in the resilience of smallholder farmers not only supports their well-being but strengthens local food systems and contributes to broader economic stability.
To bridge the gap and raise awareness of the importance of insurance, AFC Insurance is holding a workshop on agriculture insurance this Friday in Harare.
“By offering coverage for crop damage, livestock losses and property damage, insurance can help farmers and households recover from the impacts of El Nino and climate change. However, the effectiveness of insurance depends on factors such as affordability, accessibility and the availability of accurate risk assessment data,” said AFC MD Mr Cuthbert Masukume.
The 2023/24 drought, intensified by El Niño and the broader implications of climate change, led to severe water shortages, significantly reduced crop yields and quality of pastures and widespread livestock mortality and food insecurity, especially in marginal areas. This affected production, particularly small holder rural farmers who rely solely on rain fed agriculture. To mitigate against such losses, the Insurance and Pension Commission (IPEC) together with the Insurance Council of Zimbabwe tasked AFC Insurance Company to provide Insurance cover against low yield to Pfumvudza Farmers in Goromonzi, Mashonaland East Province, following a successful pioneer programme in Rushinga, Guruve in 2022/23 season. The Company managed to compensate farmers for low yield through a payout of USD232,996.75. This cover, which is called “The Farmers Basket” is being rolled out to all the provinces throughout the country for this agricultural season.
The situation was further compounded by rising human-wildlife conflict as wildlife encroached on agricultural areas for food and water, posing further challenges for local populations.
“The interconnectedness of El Niño, climate change, and insurance is crucial for understanding and addressing the risks faced by Zimbabwe. El Niño events can trigger extreme weather conditions like droughts, while climate change exacerbates these impacts through rising temperatures and unpredictable rainfall patterns. This combination of factors can lead to severe consequences for agriculture, livestock, and food security.”
By understanding the interconnectedness of these factors and implementing appropriate insurance strategies, the country can enhance its resilience and protect livelihoods in the face of future challenges. For example, the Goromonzi farmers received compensation of $65 USD , after having paid a premium as low as $15. The workshop will also showcase the benefits and importance of insurance to farmers. It helps in appreciating how insurance should be embedded in risk management strategies by farmers.
“This may involve developing tailored insurance products, improving risk assessment methodologies, and strengthening regulatory frameworks to ensure the effectiveness of insurance in mitigating the impacts of El Niño and climate change,” he said.
This workshop will delve into the factors affecting Zimbabwe’s vulnerability to El Niño and climate change, discuss the rainfall outlook for 2024/25 and explore strategies to mitigate risks. AFC Insurance has Agriculture Insurance with a variety of insurance solutions to farmers. The solutions are as follows:
Crop Insurance
What can be covered?
Fire, hailstorms, frost, drought, windstorms, excessive rainfall, theft, transit risks on the produce from the field to warehouse/depot – (encompassing fire, overturning, Collision, theft and hijacking)
Premature Germination on winter wheat crops subject to a harvesting cut-off date, 31 October
Cover on sprayed chemicals from adjourning farms,
Cover on stray domestic animals.
There are two main types of Crop Insurance covers.
a) Traditional Crop Insurance covers
(i) Multi-Peril Crop Insurance (MPCI) provides coverage against multiple perils or risks that can cause crop failure or yield losses. It typically covers a broad range of perils such as adverse weather conditions (drought, excessive rainfall, hail, frost, etc.), pests, diseases, fire, and other unavoidable risks.
(ii) Named Peril Insurance is a type of crop insurance that provides coverage against losses due to named perils for example Tobacco-Hail, Windstorm, Fire etc
(b) Parametric Crop Insurance (Index Based)
(i) Area Yield Insurance
An Area Yield Index Insurance (AYII) is an insurance cover that insures farmers against a pre-set historical benchmark. The perils covered in this product are windstorm, frost, excessive rainfall, heatwave, hail, flood, pest and diseases. The farmers are insured against a pre-set historical benchmark which is calibrated from historical yields and is known as the Average Production History (APH). APH is defined as a benchmark yield stated in the contract and is applied to determine if there are any pay-out.
(ii) Weather Index Insurance (WII)
The indemnity is based on realizations of a specific weather parameter measured over a pre-specified period at a particular weather station. The insurance can be structured to protect against index realisations that are either so high or so low that they are expected to cause crop losses.
Crop insurance coverage can either be on Input basis, where an insured is covered for the total cost of production or Yield basis where the insured is covered for the loss in yield.
Livestock Insurance
What is covered?
Accidents (fire, smoke, lightning, windstorms, impact by any road vehicle or rolling stock or railway locomotive, snake bites, accidental electrocution, falling into a pit or fallen by a tree)
Death because of illness and diseases including epidemics
Flooding, earthquake and storm damage
Malicious injury,
Calving losses
Drowning
Theft (subject to provision of police report)
Transit Risks — within a radius of 25km
The objective of the workshop includes enhancing the capacity of key stakeholders in Zimbabwe to prepare for and respond effectively to the impacts of climate variability and extreme weather events, particularly those associated with the El Niño-Southern Oscillation (ENSO) phenomenon, to build resilience and safeguard livelihoods.-herald
