August 6, 2010 | By Roger Thurow

Safe Farming

Bungoma, Kenya

In the Bungoma Chemist shop, where you can get almost everything you need to battle a cold, de-worm your cattle or fertilizer your crops, something revolutionary is now on sale.

“Kilimo Salama available here,” proclaims a red and white display on the counter, beside a cash register.  In Swahili, Kilimo Salama means Safe Farming.  It is an agriculture insurance policy, the first of its kind offered to small-holder farmers in these parts.

“We want the farmers to have confidence that even if there’s bad weather, the risk will be covered,” says Rahab Karanja of the Syngenta Foundation for Sustainable Agriculture, which developed the program along with UAP Insurance and telecommunications company Safaricom.

Kilima Salama is “pay as you plant” micro-insurance that protects farmers’ investments in seeds, fertilizers and other farming inputs against loss from excess water or drought.  It is a simple and streamlined system: farmers who till only an acre or two of land need not visit insurance offices nor wade through mounds of paperwork; all they need is a mobile phone.

Farmers sign up for the insurance at agriculture merchants like Bungoma Chemist; the cost is tabulated as they buy seeds, fertilizer and chemical supplies.  The premium for the insurance is 10% of the cost of the inputs; the farmer pays 5% and the input provider pays 5%.  The average cost to the farmer is about $3 or $4.

The transaction, conducted with mobile phones, takes a matter of minutes.  The mobile phone camera scans the product and records the price and insurance cost.  The farmer stores the insurance contract in the phone and then receives weather updates and farming advice via text messages throughout the growing season.  A network of weather stations, each covering a radius of about 20 kilometers, monitors the climate and compares conditions to historic data.  If there is too much rain or too little that would impact the crops, the insurance pays out at the end of the season.  The payout, based on the costs of the inputs, goes directly into a farmer’s account, also via mobile phone.

The idea is that the farmer, in the case of crop loss, has money to plant again the following season.  “We want to take them back to a level where they can afford seed and fertilizer for the next year,” Rahab says.

One of the most debilitating consequences of the neglect of agriculture development over the past three decades is that African farmers, alone among farmers of the world, have been left to bear 100% of the risk of a very risky business.  If a crop fails in the U.S. or in much of the rich world, someone – the government or an insurance company – writes a check.  If a crop fails in Africa, people die.

Until recently, there were very few subsidies handed out to African farmers.  There are precious few forward contracts offered, where farmers lock in a price before planting.  Less than 5% of the continent’s cropland is irrigated.  Crop insurance has been as alien as a moon rock.  The farmers plant and look heavenward for rain; it’s a high-wire act without a safety net.

That is now starting to change, as more sophisticated financial instruments, like micro-insurance, arrive in rural Africa to share the risk.

Several years ago, micro-finance organization Opportunity International launched weather index insurance in Malawi, working with the World Bank.  Opportunity had noticed that banks and other lenders were reluctant to extend credit to small-holder farmers because they worried that drought would wipe out crops and thereby also wipe out the farmers’ ability to repay their loans.  Without credit, the farmers had difficulty buying the better seeds and fertilizer and thus were relegated to a cycle of low-yield harvests.  When weather index insurance became available to mitigate the climate risk, lenders were more willing to advance credit to the farmers.

Since then, Opportunity, working with a grant from the Bill & Melinda Gates Foundation, expanded its insurance products into a company, MicroEnsure, which now covers a range of crops in several African countries, as well as India and the Philippines.

Kilimo Salama began with a pilot project last year, with several hundred maize farmers taking up the insurance for their inputs.  A drought did indeed hit, impacting the maize harvest, and the two weather stations monitoring the climate indicated a payout was warranted.  Farmers were compensated between 30% and 80% of their costs, depending on the severity of the damage.

The farmers saw the payouts, and their belief in this new-fangled system grew.

“It’s all a matter of trust,” says Rahab.  “A bad drought is usually followed by a good season.  Without insurance and compensation from the drought, they don’t have the money to take advantage of the good season.”

The 200 farmers in the pilot project district grew to 600 when the program was officially rolled out earlier this year.  Kilimo Salama expanded to several other districts in Kenya, covered by 26 weather stations.  It hopes to have 100 stations next year, and eventually grow to 600.  Rahab says about 10% of farmers in any area will sign up for insurance the first year.  “Early adopters,” she calls them, the boldest of a skeptical lot.

“Farmers aren’t easy to convince,” says Dr. Amin Ali Sheikh, proprietor at Bungoma Chemist.  He reckons he signed up about 250 farmers for the insurance this year, and about 50 of them were new customers to his shop.  “We’ll sell more next year,” he says.  “Word of mouth.”

“They all have had experience with bad weather,” says Rahab.  “They know it’s not easy to predict what will happen tomorrow with the weather.  We want to give them hope beyond a bad season.  We want to give them confidence to plant.”

Hope and confidence.  No longer such rare commodities in the fields of Africa.


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Digital Preview of The First 1,000 Days

In his new book, The First 1,000 Days, Council senior fellow Roger Thurow illuminates the 1,000 Days initiative to end early childhood malnutrition through the compelling stories of new mothers in Uganda, India, Guatemala, and Chicago. Get a first-look at photos and stories from the book in this new web interactive.

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» Order your copy of the book.


The First 1,000 Days

Roger Thurow’s book will tell the story of the vital importance of proper nutrition and health care in the 1,000 days window from the beginning of a woman’s pregnancy to her child’s second birthday.

The 1,000 days period is the crucial period of development, when malnutrition can have severe life-long impacts on the individual, the family and society as a whole. Nutritional deficiencies that occur during this time are often overlooked, resulting in a hidden hunger. It is a problem of great human and economic dimensions, impacting rich and poor countries alike.

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The Last Hunger Season

In The Last Hunger Season, the intimate dramas of the farmers' lives unfold amidst growing awareness that to feed the world's growing population, food production must double by 2050. How will the farmers, Africa, and a hungrier world deal with issues of water usage, land ownership, foreign investment, corruption, GMO's, the changing role of women, and the politics of foreign aid?

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Roger Thurow and Scott Kilman, award-winning writers on Africa, development, and agriculture, see famine as the result of bad policies spanning the political spectrum. In this compelling investigative narrative, they explain through vivid human stories how the agricultural revolutions that transformed Asia and Latin America stopped short in Africa, and how our sometimes well-intentioned strategies—alternating with ignorance and neglect—have conspired to keep the world’s poorest people hungry and unable to feed themselves.

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