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A new study shows that weather-based insurance will help smallholder farmers to withstand the effects of climate change and market shocks. The study was launched recently in London where officials of Nigeria’s Ministry of Agriculture also gathered to learn how they can implement the programme for farmers in the country.

The report was carried out by the CGIAR Research Programme on Climate Change, Agriculture and Food Security, (CCAFS) and the International Research Institute for Climate and Society at Columbia University in New York. It showcased projects that have overcome many of the challenges that have hindered farmers from having access to index insurance.

This type of insurance provides support to small farmers when there is not enough rainfall to grow sufficient yields. The insurance is based on a specific “index”, for example, wind speed or rainfall for crops.

Dr. Debisi Araba, the team leader for the Environment and Climate Change Unit for Ministry of Agriculture, explained the appeal of the insurance to food producers in Nigeria. “Nigeria has about 15 million small-holder farmers, and it’s our aim to ensure that each of those farmers not only remain productive but are able to cope with the shocks and stresses of weather induced climate change. In 2012, we had massive floods along the east and southern parts of the country. And this not only affected the livelihoods of the farmers but also made us acutely aware that farmers needed to be insulated from the shocks and stresses of climate change and one of the methods that we want to use is index insurance,”  Debisi said.

CCAFS scientists, he said, provided them with a technical workshop in London where they designed weather index insurance programme for small-scale farmers in Nigeria.

Dan Osgood is the lead scientist of the financial instrument sector team at International Research Institute for Climate and Society at Columbia University. Osgood, who is also the co-author of the study, explained how the index insurance programme can improve the lives of small-holder farmers. “For many farmers, climate change means more bad years, and so adaptation means taking advantage of the remaining normal years and being more productive in those years—you know, basic math. The problem is the kinds of things that you can do to become more productive like using a quality seed or taking out a loan for some inputs or buying an ox to be able to plow, those things involve taking a chance,” Osgood said.

Debisi said in Nigeria, one of the biggest challenges to implementing insurance as a safeguard against losing the farm is having access to data.

He said access to data used to be a constraint. Now they have concluded they have enough data to develop an insurance mechanism. “We’re working with the I-R-I— International Research Institute of Columbia University to work with the Nigerian Meteorological Agency where we’re going to collate all the data that we have from the weather stations across the country both at the federal and state levels. We’re going to synthesize these and produce high quality information that will form the backbone of the weather index insurance,” Debisi said.

The new crop insurance programme would incorporate other programmes already in existence. Planting with Peace programme is run by the Nigerian Agricultural Insurance Corporation. Another is the Growth Enhancement Scheme, which includes a data base with vital and up to date information, down to the mobile phone numbers of smallholder farmers in Nigeria.

It also distributes subsidized fertilizers and seeds to farmers. “We’re also working side by side on another framework that will enable multiple provider insurance companies to participate in extending insurance products to the farmers. And then we foresee a situation where the government then backs the more highly perceived risk areas where the private insurance companies don’t want to engage with farmers. We will back NAIC to extend insurance products to those farmers,” said Debisi.

The study also examined other countries where index insurance has been successful, such as India, Kenya, Rwanda, Ethiopia and Senegal. Small-holder farmers are beginning to understand the importance of this science-based insurance. Scientists have found that the traditional loss-based insurance is not affordable for small-holder farmers.

However, with index insurance, farmers are able to buy coverage based on an index that is correlated with a specific loss such as wind speed or rainfall amounts. Scientists at CCAFS and Columbia University say the index insurance model has the potential to build the resilience of small-holder farmers. “I think we’re going to see these kinds of models which grew from a couple hundred to tens of thousands, to hundreds of thousands, or in India because it was connected with a national programme—to tens of millions. I think and I hope there will be a real push to make sure there are solid products so that when we go to larger numbers of people, we’re giving them a good service,” Osgood said.

He highlighted the insurance needs to be meaningful to the farmers, “so that it’s actually giving them the tools to provide for their families instead of just having them sign up. And I think there’re some examples in the case studies of how it’s possible to do these things, and I think those kinds of things in the future will continue to grow.”

Scientists who conducted the study say index insurance not only protects small farmers’ assets, it also unlocks opportunities to increase productivity in the non-payout years which might allow them to escape from the traps of poverty.  Nigerian officials say they’re committed to signing up all 15 million of its farmers by 2017.

By Pita Ochai


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