Filed under Insurance

A recent initiative in Kenya allows farmers to insure their crops against bad weather. Farmers pay an extra 10% for seeds, and register the seed type purchased and location of their plot using their mobile phones. This enables their nearest weather station to be identified.

“Weather stations monitor rainfall amount and distribution in the field, which are then compared with the crop’s water requirement vis-à-vis historic rainfall patterns. In case of crop failure due to drought or too much rain, farmers will receive a text message informing them of a payout“

Apparently, many of the farmers thought this scheme was “too good to be true”! As the article highlights,

“For farmers the biggest risk is weather. To minimize exposure, they tend to use as little inputs as possible. As a consequence, their harvest is below the optimum even when rains are good. Insurance gives them the security of a payout in case of a full crop failure, therefore promoting investment in farming inputs and subsequently improving productivity”

See here for the full article.