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Farmers turn to smart insurance to insulate against climate shocks

In Kenya, 80 per cent of farmers are smallholders. However, despite the critical role they play in providing food for the nation, these farmers face numerous challenges. Smallholder crop yields are traditionally quite low and climate change is not only increasing the incidence of pests and diseases, but heightening the risk of more frequent extreme weather events, including drought and flooding. “Reports state farmers lose up to 90 per cent of their expected yield due to climate risks,” revealed Lilian Waithaka of ACRE Africa.

Faced with such losses, many smallholder farmers are reluctant to invest in their farms and instead engage in unsustainable practices to try to save money, “such as keeping their children out of school, selling off productive assets, and reducing the quality of their diets,” Waithaka shared.

Insurance can help cushion smallholder farmers from crop and financial losses that occur as a result of climate change, yet many are reluctant to invest in such schemes. But why?

According to Waithaka, the three main prohibiting factors include: Affordability: traditional insurance schemes are too costly for smallholder farmers, Trust: a lack of trust in insurance products among farmers prevents them from securing insurance premiums and Isolated approach: farmers often do not engage with other technologies and practices that can support resilience, such as the planting of stress-tolerant crop varieties, adherence to advisories, and implementing good agronomic practices.

However, through their innovative insurance offering – supported by the International Development Centre (IDRC) in partnership with the Australian Centre for International Agricultural Research (ACIAR) – the team at ACRE Africa is taking action “to link smallholder farmers to risk mitigation and climate adaptation solutions so they can comfortably invest in their farms,” revealed Waithaka.

“The PBI project offers farmers an affordable, innovative, inclusive, climate-smart agriculture solution,” Waithaka stated. It’s also easy to join – farmers simply dial a USSD code and choose the type of crop they want to cover, after which they are automatically enrolled onto the scheme.

To support PBI uptake and enhance trust levels around insurance, ACRE Africa has also established a network of ‘champion farmers’ in Kenya. These individuals are “key opinion shapers in the villages in which they reside,” explained Waithaka. Two-thirds of champions are women – and it’s been found that female champions are more likely to successfully recruit new women farmers to the PBI scheme.

At the heart of the PBI approach lies imagery, with photographs taken of farmers’ crops collected using satellites and smartphones – with champion farmers using an app called SeeItGrow to “take images of registered farmers’ crops throughout the season, which are then used in the evaluation process at the end of the season,” revealed Waithaka.

The project has developed three different machine learning models to help process the images collected, classifying crops according to their growth stage, type of damage, and extent of damage. At the end of the season, a panel of experts – comprising insurance companies and agronomists – evaluate the images to give them a ‘score’, which forms the basis from which farmers can make claims.

Farmers who take out PBI are also supported in other climate-related aspects. For instance, ACRE Africa continually provides farmers with training on how to protect their crops against climate shocks, connects them to companies that sell stress-tolerant seed varieties, and use information services to encourage them to adhere to good agronomic practices and advisories. “By helping build the resilience of smallholder farmers,” stated Waithaka, “we’re supporting individuals but also trying to foster economic growth and food security.”

ACRE Africa’s approach is proving successful. So far, the champion farmers have collected over 60,000 field images from over 7,300 farmers signed up to the PBI scheme. Of women farmers offered PBI, over half take it up – including Elizabeth, a 42-year-old mother of three living in Machakos County. “In 2021, she took out insurance cover by paying a premium of US$2,” shared Waithaka. Following a drought later that year, which saw many farmers lose their crops, “Elizabeth was able to get US$15 in compensation through her insurance – which she used to buy three bags of seeds to plant the following season.”

While ACRE Africa is keen to enhance the livelihoods of smallholder farmers, they’re also aware of the project’s impact on a larger scale. “By helping build their resilience,” stated Waithaka, “we’re not only supporting individuals, but also trying to foster economic growth and food security.”

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