Crop Insurance Can Drive Smart Agriculture in Africa

Many farmers in Africa rely on rain-fed agriculture, and their production systems are highly vulnerable to climate-related events.

These loss-causing hazards are the main cause of food insecurity on the continent. Therefore, it is important to find the right ways to reduce the risk and transfer to ensure that the production and maintenance processes are not disruptive.

  • Farmers buy crop insurance to protect against damage to their crops due to natural disasters or loss of income due to low agricultural prices.
  • The National Bank of Commerce (NBC) in Tanzania to have Agricultural insurance medicine in relation to Jubilee Insurance Companywhose purpose is to protect farmers, fishermen, and livestock breeders in this country from being damaged when faced with various disasters that may affect their farming.

It is important to look at the entire food production process and fix, reduce or eliminate food leakage, and add risk management measures such as crop insurance to cover it.

The role of crop insurance in smart agriculture

The insurance sector, over a period of time, has developed products that contribute to the protection of various social groups, individuals and organizations. The agricultural sector is not left out, and it is given to the appropriate insurance to reduce the problems that can cause food spoilage.

Insurance companies provide adequate financial compensation in time to be able to obtain the necessary food without waiting for government assistance or donors.

Insurance helps stabilize agricultural income by compensating farmers for losses in a timely and efficient manner. It ensures that the farmer is kept on the farm doing what he knows and loves the most, farming, thus contributing to food security.

Most of the farmers in the Africa it usually works on the edges. Many do not have real estate or bank assets that they can use as collateral to finance their most important purchases. By using the insurance policy as collateral, farmers can get the money they need, get their needs on time and be more profitable at each stage, thereby contributing to their country’s food security, in addition to creating their borders.

The National Bank of Commerce (NBC) in Tanzania to have Agricultural insurance medicine in relation to Jubilee Insurance Companywhose purpose is to protect farmers, fishermen, and livestock breeders in the country from being damaged when faced with various disasters that may affect their farming, according to Tanzania Daily News.

“We are closely related to the agricultural sector, and that is why we always appreciate the contribution of farmers to the national economy. Based on the same principle, we felt that it is good to come up with agricultural insurance for farmers and by confirming the CEO of NBC bank said that: Small and Medium Enterprises (SMEs), trade and Department of Agriculture, Raymond in Action.

Digital agriculture and crop insurance

Introduction of risk management techniques in agriculture in Africa is still low, although the sector is highly vulnerable to climate change and market inefficiencies.

In addition, the lack of necessary technology for early warning and weather monitoring and monitoring also affects the African continent’s risk assessment and adaptation to food security issues.

According to an article published by World Bank on June 15, 2022one of the new ways to do this to help smallholder farmers cope with climate change is climate insurance, which supports technology to help farmers cope with climate change.

Acre Africathe beneficiary is The World Bank One Million Farmers Platform (OMFP), is one group Kenya which have entered these new areas of technology. It offers farmers crop insurance plans to help them reduce crop failure due to adverse weather conditions. This is done through a small insurance company called Bima Pima, which loosely translates to “insurance in affordable products.”

“At the beginning of the farming season, a farmer buys a Bima Pima card and a bag of seeds or fertilizer, activates the card through his phone, and pays KES 50.US $ 0.50 cents), and can upgrade via SMS to increase the amount of insurance. ACRE Africa Then they mark the farm using a mobile phone system,” said Muthithi Kinyanjui, Director of Partnerships and Market Systems, Acre Africa.

The integration of satellite and weather data determines whether a farmer will receive cash directly into his mobile account in the event of drought or heavy rain in his field. The combination of smart design and digital technology gives farmers the opportunity to buy basic cards from local suppliers, use the system, add capacity, and the option to pay the money in installments and over time.

Simon Schwall founded Oko in 2020 to provide low-cost crop insurance to smallholder farmers, with the goal of helping to address the inadequacy of income distribution for those who feed the world. The Israeli-based startup partners with local mobile operators and mobile payment processors Money and Uganda to establish a service.

According to an article published by Microsoft on June 14, 2022, Oko uses the concept of index insurance to reduce costs. Most insurance policies have pre-arranged expenses to cover insurance, appraisals and other costs. Index insurance uses data analysis and risk calculations rather than on-site analysis to create affordable, accessible policies for rural customers.

Farmers register in Oko using their mobile phones. Oko then uses historical and weather data to analyze the insurance risk and determine its value. Let’s assume that the real world shows a drought or a flood. In such cases, Oko pays farmers immediately, eliminating the need to write down interest and ensuring that farmers recover from bad weather faster than before.

Having the assurance that their work will not be completely lost if there is a weather problem is a great relief for those farmers who have their eyes in the sky and their hands in the dust.