Transcript Small farmers perspective: experience and challenges in agriculture

Smallholder Farmers Perspective on Agriculture
Insurance in Malawi
by Dyborn Chibonga, NASFAM CEO
Presentation at Africa-Asia Conclave on Loss and Damage due to Climate Change to be held in
Nairobi, Kenya from August 25 - 26, 2016
Outline of presentation

About Malawi

About NASFAM

Agriculture Insurances in Malawi

How does unfavourable Weather impact on farming business

How do small farmers cope with bad weather for production

Challenges in Implementing Agriculture Insurance Schemes in
Malawi

Ensuring an Effective Agriculture Insurance programme
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Quick Facts About Malawi
•Population: about 16 million
•Population growth: 2.8%Urbanization: 14%
•Per capita GDP: $834
•Population living in poverty: 52%
•Access to improved water: 66%
•Adult Literacy: 64%
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•Agricultural sector provides:
o 85% of the labour force
o 35% of GDP
o 90% of foreign export earnings
o 65% of raw materials for industry
About NASFAM
 SHF Owned Organisation – 165,000 SHF members in
52 Associations operating in 19 Districts
 Exists to improve SHF livelihoods / incomes and lives
through:
promoting farming as a business
o enabling them to work through Associations
o linking Associations with NASCOMEX Ltd for value
addition
o providing extension and livelihoods support.
o
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Agricultural Insurance in Malawi

The main operating agricultural insurance in Malawi is the
Weather Risk Insurance (WRI)

The Weather Risk Insurance is an approach that attempts to
ensure that farmers are mitigated against the effects of drought
or/and floods

2014/2015 Season – 1. 6 million vulnerable people

2015/2016 Season – 6.8 million vulnerable people
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Weather Risk Insurance targeting
Major Weather
Risks:
1. Moisture stress under
drought conditions
2. Excessive
moisture under
flooding conditions
Highly sensitive crops:
maize, groundnuts,
paprika and Soya
Moderate to low
sensitivity
• Tobacco, cotton,
sorghum, chillies
All crops
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How unfavourable weather impacts on farming
business

Reduced profitability of land due to:
o
o
o

Land degradation (poor soils, siltation,
flooding etc) due to run-off

Loss of biodiversity as farmers resort to
earning a living through using/destroying
the environment
Dry spells and drought

Food insecurity and malnutrition
o
Little or no food at household level
o
Poor quality food for the farmers
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Reduced farmer incomes due to:
o
Reduced yield and quality impact
o
Negative returns on investment
(e.g. fertilizers)
Reduced credit worthiness
o
Withdrawal of credit facilities
o
Erosion of household assets
How do smallholder farmers cope with extreme
weather?

Climate Smart Agriculture (CSA):
o
Agricultural diversification (crops and livestock)
o
Irrigation/ winter cropping
o
Conservation Agriculture (CA)
o
Agroforestry
o
Afforestation
o
Soil Health improvement programmes

Weather Risk Insurance

Off Farm activities
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Challenges in implementing Agriculture Insurance
programmes in Malawi

Lack/inadequate instruments to measure or forecast weather

High interest rates and limited availability for agricultural loans
(+40%pa)

Small land holding sizes and lack of Secure Land Tenure leading to
high transactional costs

Lack of collateral for production credit

Inadequate organized marketing systems that would enable loan
recovery in a systematic process, e.g. at point of sale

Lack of both agriculture and climate change policies
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Ensuring an effective Agriculture Insurance
programme to build resilience in Malawi


Need for partnership with institutions providing the key services such as
o
Farmer mobilisation, organisation and production extension
o
Provision of credit and insurance
o
Provision of marketing services.
Crop selection
o

Building knowledge of participating farmers.
o

The returns must be adequate to cover the cost of the input loan and the
insurance premium.
They must be knowledgeable before they participate
Participating farmers should be in groups for collective action
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Ensuring an effective Agriculture Insurance
programme to build resilience in Malawi

Screening credit-worthiness of application (initial deposits).

Need for a Regulatory framework as the programme grows.

In the interim, a Code of Conduct alongside a Product Manual should be
developed.

Reduced interest rates will be an incentive for those taking insurance cover,
and should offset the cost of the premiums.
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“The future belongs to the organized!”
www.nasfam.org
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Thank You!