A new program for agricultural insurance for Rwandan farmers-‘Kilimo Salama’ was launched October 11, to offer farmers with low-cost insurance to protect their loans for high-yielding seeds, fertilizers, and other farm inputs.
Through the use of automated weather stations the program is expected to drive groundbreaking low-cost micro-insurance plan for Rwanda’s farmers.
Eight fully automated weather stations have initially been installed in the Southern and Western provinces. These stations, which are the first of their kind in Rwanda, are fitted with transmission systems capable of broadcasting regular updates on weather conditions and rainfall recorded. When data from a particular station indicate that extreme weather conditions (including excessive rains and drought) are likely to cripple crops, it will trigger a payout to One Acre Fund, which will subsequently compensate individual farmers or forgive their loans.
The program, called “Kilimo Salama,” which in Kiswahili means “safe farming,” is a partnership between the Syngenta Foundation for Sustainable Agriculture, the Ministry of Agriculture and Animal Resources, One Acre Fund, SORAS Insurance, and Swiss ReCorporate Solutions.
As Rwandan farmers face increasingly erratic rainfall, the project will offer farmers who plant maize and beans, even on as little as a tenth of a hectare, insurance to shield them from significant financial losses when the weather damages their crops.
This product will benefit at least 20,000 farmers in the Southern and Western provinces of Rwanda with use automated weather stations to offer low-cost insurance to protect their loans for high-yielding seeds, fertilizers, and other farm inputs.
“When it comes to the weather, most farmers have no choice but to simply pray for rain. And if the rains don’t come, the crops don’t grow. At a time of global change, we are trying to give farmers more options so they can meet these challenges and prosper,” said Agnes Kalibata, Rwanda’s Minister for Agriculture and Animal Resources, during the event.
The initiative and offering of the Kilimo Salama products in Rwanda follows the launch of Kilimo Salama crop insurance in Kenya in 2010. It will respond to the extreme or erratic rains and drought trap many Rwandan farmers in poverty, and repeated bad weather can rob them of the means to recover in the following growing seasons.
Marco Ferroni, Executive Director of the Syngenta Foundation. We have in Kilimo Salama a proven micro-insurance strategy that will work. To date, we have insured 73,000 farmers in Kenya and Rwanda, and have made insurance payouts to over 10,000 farmers in Kenya.”
The program will offer farmers in the Southern and Western provinces insurance bundled with loans provided by One Acre Fund for fertilizer and other inputs. Currently very few farmers in Rwanda use improved seed and nutrition for their crops. A key reason for the low investment in the sector is the fear among both farmers and lenders to the agricultural sector that poor weather conditions will leave farmers without a harvest and wipe out their savings. There is no incentive to invest in farming if the worry of being hungry and indebted looms over a farmer’s head. Likewise, lenders will not extend credit with the risk of farmers defaulting being so high.
Through the new program Rwandan farmers will pay an insurance premium as part of their loan repayments for fertilizer and other improved inputs offered by the Ministry of Agriculture and Animal Resources and its partner One Acre Fund.
“Our farmers invest in better harvests through the use of better inputs. With this insurance, our farmers can now protect their families against the risk of losing their investment due to erratic weather,” said Cor Oudes of One Acre Fund.
“The use of data from automated weather stations to approximate actual farm losses is an innovative and cost effective alternative in situations where the losses cannot be assessed, through traditional means of assessing claims for each smallholder” adds Christina Ulardic Head of Market Development Africa with the project’s international risk taker Swiss Re Corporate Solutions. “Moreover, a model where insurance is bundled with other farm services, such as credit and distributed through an intermediary who directly deals with the customers has proven to be more successful than stand-alone insurance offerings.”
“By using the weather stations to verify local weather conditions, we are avoiding expensive and lengthy claims procedures that have created mistrust and led people to avoid insurance,” said Benjamin Mbundi, Managing Director of SORAS Insurance. “This product has the potential to make agricultural micro-insurance affordable and attractive for smallholder farmers and economically viable for insurance companies in developing countries that had previously ignored most of the agricultural sector.”