HomeLocal NewsAgriculture crying out for insurance

Agriculture crying out for insurance

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Farming in this day and age has become a risky business owing to a considerable number of supervening circumstances beyond the farmer’s control such as droughts, floods, diseases and climate change.

Agricultural insurance, according to the Common Market for Eastern and Southern Africa (Comesa), has been identified as one of the key strategic interventions that can cushion farmers from the vagaries of these misfortunes.

Comesa, in collaboration with the European Union (EU), brought together agro-dealers and the financial sector to forge a partnership that endeavours to see the concept of agricultural insurance take off in the region.

The move came after realising that insurance plays an important role in the agricultural sector and financial institutions in the region need to take an active role in providing agricultural insurance to farmers.

This form of insurance transfers the risk associated with uncertainties in farming from the farmer to the private sector.

Vice-president of Micro-Ensure, a regional micro-finance company, Shadreck Mapfumo, said the concept of agro-insurance is key in ensuring increased productivity in the agricultural sector as farmers usually suffered when faced with a bad season.

Farmers find themselves in a predicament where they are unable to finance operations in the next farming season.

“When there is a drought and a farmer sells their property to service their debts, in this case insurance assumes the risk. The farmer would have income as if there was no drought,” Mapfumo said.

He added that insurance could act as a financing method enabling farmers to recuperate from the loss incurred from the previous farming season, and were able to utilise benefits from insurance to finance their activities.

Comesa reiterated that agro- insurance products were pivotal in insuring that farmers accessed the much-needed financial assistance and improved access to inputs.

The net effect of those comprehensive products would be increased production and market outlets for agricultural products.

“Lack of financial resources and access to inputs has been the greatest hindrance to farmers in the region. This state of affairs impacted negatively on agricultural production,” Mapfumo said.

Given the high rate of uncertainties, high costs of inputs and transportation owing to poor infrastructure within the region, it was critical to develop other financing mechanisms for the agricultural sector.

One problem peculiar to Comesa came as a result of member states adopting a policy of land nationalisation.

Due to this policy, financial institutions were now reluctant to take land as a form of collateral.

“It is imperative to look for alternative forms of collateral; farmers can use livestock and crop insurance as an acceptable form of collateral.

Agricultural insurance enables one to purchase inputs on credit and it is easier to secure lines of credit,” said a Comesa representative.

President of the Zimbabwe Agricultural Entrepreneurs’ Association, Chance Kaseke, said the concept of agricultural insurance was a step in the right direction.

Farmers in Zimbabwe suffered from lack of financial resources which eventually left them trapped in a vicious cycle of debt and perpetual poverty.

Kaseke said: “Agro-based insurance will resolve issues to do with improving access to loans, inputs and other farming requirements. The move will assist in increasing agricultural production, ensuring food security in the region.”

Kaseke added that farmers in the country financed business “through borrowing from Peter to pay Paul, which is not sustainable in any form of business”.

Women in Agri-Business in Sub-Saharan Africa Alliance country president Theresa Mazoyo said the concept of agricultural insurance not only assisted farmers but could also aid agro-dealers.

“Agro-dealers will be able to advance loans in the form of inputs to farmers, the risk of defaulters will be minimised when that farmer is insured.” she said.

Agro-dealers in Zimbabwe did not have much needed financial resources and banks were reluctant to advance loans to them, but they had garnered support from non-governmental organisations that were now giving vouchers to farmers, which the agro-dealer could remit for cash.

“Agro-insurance would be of great help to agro-dealers as this will enable them to get inputs on credit from agro- producers, it will go a long way to aid their business,” Mazoyo said.

She emphasised that agro- dealers were crucial as they ensured delivery of appropriate inputs to the farming community and provided answers to the farmers’ problems of accessing credit.

Agro-dealers are linked to inputs, outputs market and can be useful in providing the latest technology and information to the farming communities,” she said.

Retlaw Matatu Matorwa is a media consultant and human rights practitioner.

He writes in his own personal capacity and can be contacted on retlawyaa@gmail.com

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