The researchers from the Netherlands-based EARS Environment Monitoring Limited, a remote sensing and climate service provider, in a statement released last month (30 April), say most countries in Sub-Saharan Africa face major challenges in the development of agricultural insurance, including high costs and lack of data.
Andries Rosema, the reports co-author and senior researcher with EARS Earth Environment Monitoring Ltd, tells SciDev. Net that the cost of drought insurance to the farmer consist of pure risk premium and transaction costs.
Typical catastrophic drought index insurance premiums for small-scale farmers with two acres cover US$200 and quality farming inputs package (seeds and fertiliSer) would be US$10, says Rosema.
The researchers used satellite data that focused on factors that lead to crop losses such as droughts and heavy rainfall. Drought was determined by measuring the amount of water lost through soils as a result of evaporation and through plants leaves two processes called evapotranspiration.
The four-year project, initiated in 2009 has led to trials of the new insurance in Benin, Botswana, Burkina Faso, Kenya, Malawi, Mali, Mozambique, Rwanda, Senegal, Tanzania, and Uganda for crops such as maize, wheat, rice, beans and cotton. The projects final report was published in January this year.
The study was funded to the tune of 1.6 million euro (just under US$2.2 million) by the Foreign Affairs Ministry of the Netherlands and partners based in Africa and abroad.
The researchers hope to reach one million farmers with the insurance during the next three to five years, according to the report.
Zimbabwe Commercial Farmers Union president Wonder Chabikwa says: The technology is a victory for African famers who need insurance protection to restrain them from past excessive droughts and sporadic rainfall impoverishing the continent, causing hunger and nutrition.
Howard Ziko, the regional manager of Navistar Insurance Brokers, Manicaland, Zimbabwe, concurs: The Meteosat-based index insurance system is an effective mechanism meant to reduce losses to African farmers who continue to suffer due to higher unpredictable costs, uncertain future and lack of information that predicts the nature of the farming seasons, including floods, droughts and outbreaks of pests and diseases.
Basil Nyabadza, the chairperson of Zimbabwes Agriculture and Rural Development Authority in the Ministry of Agriculture, Mechanisation and Irrigation Development, adds that the country is working towards adopting such technology, but advises that Africa must lead such scientific efforts.
Link to the report
This article has been produced by SciDev.Nets Sub-Saharan Africa desk.