Only 10% of farmers covered by insurance

CLOUDINE MATOLA

Only 10% of farmers registered under Zimbabwe’s Farmer’s Basket Insurance program, are covered after  having paid their premiums, highlighting a critical gap in the country’s efforts to mitigate financial risks from climate-related disasters.

The initiative, spearheaded by the Insurance Council of Zimbabwe (ICZ), aims to provide affordable insurance to smallholder farmers vulnerable to erratic weather patterns. ICZ, is supported by a coalition that includes the Insurance and Pensions Commission (IPEC), the Ministry of Finance, Economic Development and Investment Promotion, the Ministry of Lands, Agriculture, Fisheries, Water and Rural Development, insurance brokers, farmers’ associations, and developmental partners in this initiative.

Together, they are working to develop an agricultural index-based insurance product aimed at mitigating the impacts of climate change.

The uptake  of the insurance program has been slow, compounded by delayed rainfall across several regions  , which has left many farmers hesitant to commit.

Cuthbert Masukume, Managing Director of AFC Insurance, who oversees the program on behalf of ICZ, noted that delayed rainfall has been a significant factor in the slow uptake of the insurance product. Speaking to Business Times, Masukume highlighted that many farmers were hesitant to pay premiums before planting, as they lacked tangible assets to insure.

“Premium payments remain low, with only 10% of registered farmers having already paid. However, with the recent countrywide wet spell, many farmers have begun planting. We believe this will motivate them to take out insurance to protect their crops,” said Masukume.

He further explained that the program is designed to be accessible, with premiums set at an affordable US$25 per annum per farmer, payable in installments.

“Farmers are now beginning to see the value of securing their crops against risks like droughts or floods, which are becoming more frequent due to climate change,” he added.

The Farmer’s Basket program has registered close to 5,000 farmers, with Goromonzi District accounting for over 60% of participants.

This high participation rate follows a successful pilot phase conducted in the district last year.

“Registration is ongoing across all provinces and districts. Besides Goromonzi, we are seeing promising support from Buhera and other districts such as Bindura, Gokwe South, Hurungwe, Chiredzi, Umguza, and Bulilima,” Masukume said.

In the pilot phase, 4,014 smallholder farmers from 21 wards in Goromonzi registered, but only 1,800 paid the requisite $15 premium.

Despite this, the program delivered a significant US$233,000 payout to farmers in the district, highlighting its potential to cushion farmers from financial losses due to climate-induced risks.

The low payment rate underscores a critical challenge. Farmers are reluctant to pay premiums when their fields are unplanted or when rains are delayed.

This issue highlights the need for more robust awareness campaigns to educate farmers on the benefits of agricultural insurance, even in uncertain weather conditions.

Masukume emphasized that the program is not just a business initiative but a critical tool for building resilience among smallholder farmers. “Agricultural insurance provides a safety net, ensuring that farmers can recover quickly from adverse weather events. We are working hard to make this product widely understood and adopted,” he said.

The Farmer’s Basket program comes at a time when climate change is wreaking havoc on agriculture in Zimbabwe.

Prolonged dry spells, erratic rainfall, and extreme weather events are becoming more frequent, posing a significant threat to food security and farmer livelihoods.

To address these challenges, the ICZ and its partners are developing innovative solutions, including the proposed index-based insurance product.

This product will calculate payouts based on weather data, ensuring faster and more efficient claims processing.

Despite the low uptake, stakeholders remain optimistic.

With ongoing rains and an increasing number of farmers planting their crops, the hope is that more will see the value of securing their investments. Additionally, the ability to pay premiums in installments is expected to ease financial pressure on farmers, making the program more accessible.

“The momentum is building. Once farmers witness the benefits experienced by their peers in Goromonzi, we anticipate a surge in participation,” Masukume said.

As the Farmer’s Basket program works to secure the livelihoods of Zimbabwe’s smallholder farmers, the current 10% premium payment rate serves as a stark reminder of the challenges ahead.

Bridging the gap between registration and actual payment will require strategic interventions, awareness campaigns, and continued support from all stakeholders.

In the face of a changing climate, agricultural insurance remains a critical component in safeguarding the nation’s food security and ensuring the sustainability of smallholder farming.