Thumbs up for weather-based index insurance for southern Africa’s smallholder farmers

A briefing note on the ‘Promoting Risk Pooling at Regional Level’ workshop held August 2019

JOHANNESBURG, 20 August 2019 (SACAU) — Farming and insurance industry players recently agreed to promote widespread adoption of weather-based index insurance (WBII) by smallholder farmers in southern Africa and established a Working Group (WG) to spearhead this effort. The decisions are the outcome of a multi-stakeholder consultative workshop to discuss the pooling of climate change risk at the regional level. The 5-6 August workshop was organised by the Southern African Confederation of Agricultural Unions (SACAU), with support from the Technical Centre for Agricultural and Rural Cooperation (CTA), as part of its programme to support farmers in managing climate change.

Increasing access and availability of WBII for farmers

Risk pooling across southern Africa will enhance access to and availability of the product by large numbers of farmers. Spreading risk across different geographies and associated climatic conditions are expected to significantly reduce the re-insurance costs and, ultimately the premiums paid by farmers. A regional approach also creates a larger market which makes entry more attractive for insurance providers.

Successful regional pooling requires the creation of an enabling environment, chief among them the provision of an appropriate regional policy and regulatory framework. This is in fact considered a deal-breaker – it is indeed the most important lever and pivot.

Working Group tasked to action outcomes

The WG established to action the outcomes of the workshop is comprised of farmers’ organisations, reinsurers, insurance companies, actuaries, intergovernmental bodies, international agencies and sector experts. It will advocate for an enabling cross-border policy/regulatory environment that will stimulate and facilitate risk pooling by insurance service providers to make their products more widely available and affordable to farmers. Engaging SADC will be key. The WG will also take forward the workshop’s recommendation to organise a regional conference on agricultural insurance.

SACAU will chair the WG as part of its continued curation of the process of enhancing access to WBII by farmers in the region.

Key messages

Several takeaways, key messages and lessons emerged during the workshop, among them:

Policy/Regulatory Framework

  • The Common Market for East and Southern Africa’s (COMESA)Yellow Card cross-border Vehicle Insurance provides an example of a working regional regulatory/policy framework. Practical implementation of WBII can benefit from this example.
  • The Southern African Development Community’s (SADC) Draft Disaster Risk Reduction Strategy and Action Plan 2020-2030 calls for risk financing, while the Ministers’ Council 2017 decision for approval of the Regional Preparedness and Response Strategy 2016-2030 provides for the establishment of the Disaster Fund and Sustainability Plan (for preparedness and response).
  • National regulatory bodies have a role to play, particularly in the design of the domestic regulatory arrangements, and the monitoring of product quality.
  • The majority of SADC member states do not have policies in place appropriate to WBII.

Increasing awareness and uptake

  • There is sufficient appetite for risk pooling at the regional level from key stakeholders, including farmers’ organisations, insurers and reinsurers, regulators, research institutions, multilateral organisations, ARC, and intergovernmental organisations.
  • Sensitisation on WBII needs to take place across various levels from the policy/decision-making levels to farmers to increase awareness and uptake. National farmers’ organisations and some SADC member states are interested in WBII and request technical assistance.
  • Studies show that WBII, when triggering payouts early, helps farmers save their livestock and crops instead of providing compensation when the damage has already occurred.

Technology key to uptake and impact

  • A growing digital agricultural space eases farmers’ ability to pay premiums, file a claim, receive payouts, receive farming tips and weather information as well as bundled products.
  • The use of digital tools such as smartphones and satellite imagery enables insurance providers to monitor crop health and farming practices, providing a way to minimize basis risk and reward good practices.
  • The technology enables this to be done at scale.

Integrated solutions

  • WBII should not be presented as a panacea. Although influencing coping with shocks and production decisions, few studies show impacts on productivity and profitability. To strengthen these impacts, WBII needs to be complementary to other instruments as well as to good agricultural practices.
  • Examples show that farmers are more likely to take up insurance when it is part of a bundle of products such as life insurance or input subsidies.

Overcoming insurance sector competitiveness

  • Establishment of a multi-stakeholder working group to carry forward the agenda demonstrated that dialogue helps to break some of the silos and competition among the private players by focusing on the non-competitive elements of their businesses in which they have mutual interest.

Looking ahead

Next steps towards the goal of WBII for smallholder farmers include convening a regional conference on agricultural insurance and engaging SADC on the development of a regulatory/policy framework for regional risk pooling. The multi-stakeholder nature of the engagement and interest around WBII through the workshop demonstrates the potential for a cushion for farmers who are increasingly experiencing climate shocks. Awareness-raising and information sharing by farmers’ organisations within their constituency and advocacy for policy change at the national level will be key to the success of the strategy of making WBII accessible and affordable for smallholder farmers. SACAU, in its role as convener of the WBII Working Group, will continue to push forward the agenda as one of its key priorities.


[1] Members of the WG: SACAU (Regional Farmers’ Organisation and Chair); International Finance Corporation (IFC); International Food Policy Research Institute (IFPRI); African Risk Capacity (ARC); The Common Market for East and Southern Africa (COMESA); Southern African Development Community (SADC); South Africa Insurance Association (SAIA); Swiss Re; Atchison Actuaries & Consultants; Santam Insurance; GIC Re SA Ltd; and industry experts in their personal capacities.

WBII leaflet

Click here to download: WBII_Leaflethttp://www.sacau.org/wp-content/uploads/2019/08/WBII_Leaflet.pdf

FORTHCOMING EVENTS

The following events are planned for November:

1. Southern African Cotton Producers Association Steering Committee Meeting: 08 November, South Africa

2.  Closing Workshop of the Support to Farmers Organisations in Africa program: 08-09 November, South Africa

3. Board Meeting: 03 November 2018, South Africa

4. Consultation meeting with land based organisations in the region: 26 – 27 November, South Africa

SADC meets international partners in the agriculture sector

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The Southern African Development Community (SADC) organised a consultation meeting with its International Cooperating Partners (ICPs) in Gaborone from 11 to 12 October 2018.

The consultations that were hosted by the Food Agriculture and Natural Resources (FANR) Directorate provided an opportunity for both SADC and ICPs to update each other on new developments including SADC decisions and other agricultural related global developments. Delegates were informed that the SADC Council approved the Regional Agricultural Investment Plan (RAIP) in March 2017 and that the RAIP is premised on the SADC Regional Agricultural Policy (RAP).

Execution of RAIP is expected to enhance agricultural production, productivity and competitiveness of crops, livestock, forestry, fisheries and wildlife as well as support trade, industry and food security in the region. In addition, regional and international trade and access to market for agricultural products (crops, livestock and natural resources) is expected to improve.

One of the issues that stood out during the meeting was the SADC Water, Energy and Food Security (WEF) Nexus Dialogue Project which is aimed at supporting the transformation required to meet increasing water, energy and food security demands in a context of climate change in the SADC region through the development of a truly integrated nexus approach.

This approach was approved by the SADC Council and FANR was given the mandate to formalise the WEF Working Group within the Secretariat to drive the coordination and reporting mechanisms to respective Ministers through sectoral and/ or joint meetings. FANR will also mobilise resources to build capacities of member states for them to improve their skills to enhance sectoral coordination in building water, energy and food security.

Phase one of the program is aimed at helping regional organisations and their member states apply a nexus approach in the formulation of multisector policy recommendations, strategies, action plans and investment programmes. This phase will also identify concrete investment projects – with a focus on multi-purpose water infrastructure – which could be funded under Phase II.

Country assessments on the WEF have been completed for all the 15-member states where opportunities for WEF nexus approaches were identified. Regional governance and stakeholder analysis is under way and progressing very well.

A draft outline of the SADC regional WEF Nexus Operational Framework and project identification and screening criteria have been developed and a list of potential projects for screening using WEF nexus tools is being consolidated. It is important that farmers’ organisations at all levels follow closely these processes at national and regional levels.

The AGRF Communique

(Picture: AGRF) President H.E Kagame and delegates at the Eighth African Green Revolution Forum

(Picture: AGRF) President H.E Kagame and delegates at the Eighth African Green Revolution Forum

The Eighth African Green Revolution Forum (AGRF) was held in Kigali, Rwanda, from 5 to 8 September. The Forum was hosted by H.E. Paul Kagame, President of the Republic of Rwanda and 2018 Chairperson of the African Union. Other co-hosts were the 17 members of the AGRF Partners Group, which include SACAU and the Alliance for a Green Revolution in Africa (AGRA) as the AGRF Secretariat.

The Forum was attended by 2,800 delegates, including current and former heads of states, from 79 countries. There were more than 46 sessions and 350 speakers. The theme of the AGRF was Lead, Measure, Grow: Enabling New Pathways to Turn Smallholders into Sustainable Agribusinesses. It recognised that Africa is on the move with many nations pushing to achieve middleincome status and a few others aspiring for high-income status. But achieving these aspirations requires innovative and evidencebased leadership across the agricultural sector.

The discussions highlighted, among others, the technology, innovations, policies and institutions that can lead to an economically and environmentally sustainable African agriculture transformation. Delegates discussed how to equip farmers with what they need to succeed and connect them to stable food systems that can translate their abundant harvests into a wider assortment of affordable, nutritious food for African consumers.

The 2018 Africa Agriculture Status Report (AASR) “Catalysing State Capacity to Drive Agriculture Transformation” was also launched during the official opening. It places a central focus on state capability in achieving desired outcomes from agriculture. The Forum paid tribute to H.E. Kofi Annan, the former UN Secretary General, who sadly passed away in the month leading up to AGRF 2018. He is the one who called for a uniquely African Green Revolution that resulted in the formation of AGRF and its secretariat, AGRA. Leaders applauded the launch in January of the Inaugural Biennial Review Report and African Agriculture Transformation Scorecard (AATS), which the African Union presented as coming through on commitments it has made to Heads of State and the sector. It is the first such report on the implementation of the 2014 Malabo Declaration on Accelerated Agriculture Growth and Transformation for Shared Prosperity and Improved Livelihoods.

The report revealed that 20 of 47 African Union Member States are on track to achieve commitments made in the 2014 AU Summit in Malabo, Equatorial Guinea. Leaders commended the willingness of all 47 countries to provide a thorough and transparent accounting of areas where they are progressing and areas that still need attention so that they can learn from each other and continuously improve.

However, leaders also noted that current progress is still insufficient to achieve the vision forged in the Malabo Declaration. They sought out fresh approaches and commitments that can supercharge the agriculture sector and unleash the full potential of Africa. Several major outcomes and action agendas were embraced during the AGRF 2018.

Specifically, the Forum endorsed significant commitments around securing new agribusiness investments, engaging new development partners, increasing regional trade in agriculture commodities, and embracing evidence-based leadership. The 2018 Africa Food Prize was awarded to the International Institute of Tropical Agriculture (IITA), the first institution to receive the prestigious award

It was selected for its leadership in generating agricultural research and technologies that have improved food security, nutrition, and incomes for millions of people across Africa, and for its consistent innovation to find new solutions to the continent’s most pressing challenges of youth unemployment, climate change, and pests and diseases.

The launch of the new Fall Armyworm Research for Development (R4D) International Consortium that brings together 35 public and private sector institutions to create a coordinated strategy and consolidate millions of dollars in new support to fight an invasive plant-eating insect that could cause US $6 billion in damage to maize, sorghum and other African food staples.

For the full AGRF communique and more information, contact: agrf@agrf.org or +254 203675000

Role of institutions in facilitating the adoption of CSA

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Emperical evidence suggests that institutions play a pivotal role in facilitating the adoption of Climate Smart Agriculture (CSA) practices on a wide scale.

Institutions and institutional arrangements serve important functions in information gathering and dissemination, resource mobilisation and allocation, skills development and capacity building, and creating linkages between decision makers and several other entities, including the farmers’ constituency.

This was one of the main discussion points led by SACAU in a public dialogue convened by the National Council of the Namibia National Farmers Union (NNFU) in September 2018 in Swakopmund, Namibia. In attendence were representatives from various stakeholders, including the government; private sector; research institutions; finance institutions; local and international development agencies as well as NNFU council members.

Convened under the theme, “Climate Smart Agriculture: The future for communal farmers in Namibia”, this session sought to enlighten participants on their individual and collective roles within the CSA institutional set up. The institutional environment, which is broadly defined by prevailing legislation, policies, rules and regulations, programmes as well as organisations providing CSA related goods and services in a particular country or region, determines whether CSA practices will be implemented effectively or technology will be available and accessible to farmers.

More importantly, if adopted, the institutional environment will determine whether CSA practices and/or technologies will bring positive changes to the farmers’ livelihoods as ground implementers. Farmers’ organisations (FOs) are part of the CSA institutional set up, and have a strong potential to consolidate and disseminate innovations developed by farmers themselves and ensure that farmers’ priorities are represented in the broader agricultural development agenda.

In addition, FOs are expected to conduct their own research (individually or in collaboration with others) and use generated facts to advance their advocacy for better CSA related policies and investments.

Regional dairy associations meet to discuss issues affecting the performance of the sector

COWS

SACAU co-hosted the regional dairy platform meeting with We Effect from the 29 to 30 October 2018. The meeting has become part of key annual activities aimed at improving production and productivity of the members of dairy associations at farm level.

The proper management of dairy farm activities is the starting point in ensuring that our countries and indeed the region can be competitive and become globally significant in trade of dairy products. The meeting, which was held in Johannesburg, South Africa drew participation from eight countries in the region. Apart from presentations of country situations from the dairy associations and national farmers’ unions that were represented at the meeting, presenters that came to present on specific dairy sector related topics were organised.

The focus areas were: dairy sector outlook, climate change, intra-regional and global trade of dairy products, technological advances in the dairy sector and the schools feeding/milk programme. The presenters were drawn from organisations with expert knowledge of the sector and they provided insights on current trends based on research findings.

The associations raised concerns on challenges negatively affecting their production among them, access to finance, the low farmgate price of milk, milk producers being price takers, policy matters, and their own capacity constraints. The presentations and deliberations also highlighted a number of key issues of importance. The dairy sector remains a highly risky business and milk producers need to be vigilant and know how to harvest the highs and manage the lows.

The measurement of inputs and the outputs will assist the milk producer to do a proper assessment of the viability of the dairy business therefore recordkeeping becomes imperative. The smallholder dairy farmer is operating on the margin, efficient use of resources is unavoidable if the farmer is to sustain the business. The unit of production, in this case, the dairy cow is the most important asset the dairy farmer has, and the farmer must ensure that the animal is well looked after for it to be productive.

The agricultural sector and the dairy sub-sector specifically are now a science, knowledge, data and technology driven business, so the farmer needs to progressively adopt affordable modern methods of production to avoid being left behind. The dairy farmers should be involved in initiatives to promote the consumption of milk such as
the schools milk programme as it presents opportunities for smallholder dairy producers to enter mainstream formal markets.

Climate has been changing over time, it is only now that we are beginning to see the impact of unfavourable weather patterns on agricultural production systems. The dairy farmer should therefore use a multi-faceted approach such as use of drought tolerant feed plant species, for instance the spineless cactus and many other types available.

The level of youth participation in the dairy sector was a bit worrying and the regional dairy associations should be devising ways of promoting the involvement of a young generation of dairy farmers.