MICRO-INSURING FARMERS IN LIGHT OF CALAMITIES: KENYA SHOWCASE

MICRO-INSURING FARMERS IN LIGHT OF CALAMITIES: KENYA SHOWCASE

Erle Frayne D. Argonza

Climate change + burgeoning population are causing pressures on food production. Famine has hit the Horn of Africa anew due to drought, a famine that has affected 11 millions of poor small planters. What intervention tools can be applied in support of rehabilitation works post-calamities?

Micro-insurance is one such tool, which could come in different forms. It could morph as crop insurance. Likewise can it come as calamity insurance. The latter option still has to be conceptualized though in developing countries.

Kenya has its own version of innovation on micro-insurance, which when combined with high-tech solar-energized climate/weather tracking there surely makes for a highly appreciable project. Below is a report about the subject.

[Philippines, 05 November 2011]

Source: http://www.scidev.net/en/agriculture-and-environment/farming-practices/news/micro-insurance-scheme-pays-off-for-kenyan-farmers.html

Micro-insurance scheme pays off for Kenyan farmers

Tom Mboya

14 October 2011 | EN

[NAIROBI] Some of the farmers who lost their crops in the Horn of Africa drought this year may be able to afford farming next season, with the help of a 'micro-insurance' scheme.

Kilimo Salama — Swahili for 'safe farming' — was launched last year, providing small-scale farmers in Kenya with crop insurance by combining mobile phone payment with the data from automated weather stations.

Farmers register with one of 30 solar-powered weather stations, each covering a 15–20 kilometre radius, and purchase insurance when buying seeds and fertilisers. Kilimo Salama uses data from these stations to calculate the severity of droughts — or excessive rainfall. Eligible farmers then receive payouts via their mobile phones.

In March, it paid out US$3,135 each to more than 1,200 farmers for losses after lack of rain, and more than 1,400 farmers received US$9,230 each in September because of prolonged droughts that caused crop failure.

"Since its inception, the project has been a big success," said Wairimu Muthike, project's lead field coordinator.

He added: "The number of farmers willing to protect their crop by insuring their farm investments has increased tremendously. The sum insured among interested farmers has also been growing."

According to Wairimu, the best indicator that the project is succeeding is the number of larger-scale farmers it is attracting.

Finance is entirely derived from the premiums collected from farmers, according to Rahab Wambui, a field coordinator with the project, rather than coming from commercial or charitable sources.

"This will result in the sustainability of the programme," she said.

The project initially enrolled 9,000 farmers but the number has increased to 21,341 this year. In 2009-2010 it targeted maize, but this year it expanded to include wheat, beans, and sorghum.

"Many farmers find this to be an effective way of ensuring that, when adverse effects of nature set in, they can find an alternative source of funding in order to cultivate again," said Silas Waweru, a farmer who has benefited from the payout.

Wairimu said that potential plans for spreading the programme to other countries were still classified.

The Horn of Africa has been hit by the worst drought in 60 years, according to the UN. It has caused a widespread famine affecting millions of people, despite having been forecast months in advance.

Livestock farmers in Kenya are expected to find out about their claims from another, satellite-based insurance scheme this month.

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TRADE & HUNGER: SALVING HUNGER VIA TRADE POLICY

Bro. Erle Frayne Argonza

Let me continue on the issue of hunger, which many politicians are raising howls this early in time for the 2010 polls. The tendency right now, with politicians’ short-sightedness and poverty of wisdom, is that hunger will be perpetuated and sustained even long after the same politicians are all dead.

In the study on fair trade & food security I did for the national center for fair trade and food security (KAISAMPALAD), I already raised the howl about hunger and recommended policy and institutional intervention.

Since other experts, notably nutritionists, already highlighted many factors to hunger and under-nutrition, such as lifestyle problems, economics, and lack of appropriate public policy, I preferred to highlight in that study the factor of trade on food insecurity and the hunger malaise. Let me cite some cases here to show how trade and hunger are directly related:

· Immediately after the termination of the sugar quota of the USA for Philippine-sourced sugar in the early 80s, the domestic sugar industry collapsed. 500,000 hungry sugar workers and their dependents had to line up for food, a tragedy and calamity that shamed the country before the international community. Till these days, the trauma caused by that ‘line up for porridge’ solution remains among those children of those days who are now adults, one of whom became my student at the University of the Philippines Manila campus (a girl).

· Two years ago, a cargo ship carrying PETRON oil to the Visayas got struck with leaks and a tragic spillage covering wide swaths of sea waters. The island province of Guimaras suffered catastrophically from that incident, its economy was as bad as a war-torn economy for one year. Its marginal fishers couldn’t fish for at least one year as the sea spillage had to cleaned up. The hunger and under-nutrition caused by that tragedy is indubitably related to a trade activity: oil being transported to a predefined destination.

· At the instance of trade liberalization on fruits upon the implementation of a series of GATT-related and IMF-World Bank sanctioned measures that began during the Cory Aquino regime, the massive entry of apples and fruit imports immediately crashed tens of thousands of producers of local mangoes, guavas and oranges, as domestic consumers (with their colonial flair for anything imported) chose to buy fruit imports in place of local ones. Economic dislocation and hunger instantly resulted from the trade liberalization policy.

The list could go on and on, as we go from one economic and/or population to another. What is clear here is that trade measures and activities do directly lead to food insecurity and the attendant problems of malnutrition and hunger. In the case of the Guimaras oil spillage calamity, humanitarian hands such as the Visayan provinces and Manila’s mayors’ offices, added to private and NGO groups, quickly moved to help the affected residents. Of course the PETRON itself took responsibility for the spillage, clean up, and offered humanitarian help as well. But did trade stakeholders ever paid for the hunger malaise suffered by the sugar workers and families, fruit small planters, and other families in the aftermath of shifting trade policy?

A strategic solution to trade-related hunger would be to constitute a Hunger Fund, whose funds shall come from at least 0.1% of all tariffs (on imports). A 0.1% tariff alone today translates to P800 million approximately, or close to $20 Million. This can serve as an insurance of sorts for trade-induced hunger. The funds will then be administered by an appropriate body, comprising of representatives from diverse sectors and headed by a nutritional scientist of international repute (e.g Dr. Florencio) rather than by a politician or ignoramus species.

Furthermore, insurance groups here can begin to innovate on food production-related insurance to cover force majeure damages. Cyclone insurance and earthquake insurance would be strong options for agricultural producers, even as other options can be designed most urgently.

I would admit that trade-related hunger and its solutions are practicable for the productive sectors of our population. There are 2.3 million street people today who comprise the relatively ‘unproductive sectors’, who all suffer from hunger. This need to be tackled as a distinct sector and problem, and discussed separately.

[Writ 28 July 2008, Quezon City, MetroManila]