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Jon Hellin – Crop-index insurance for smallholder farmers

Climate change makes it more difficult for farmers to adapt and a lot is linked to risk If farmers for example have traditionally planted maize and they’ve recycled it and haven’t had to pay for it, and now they’re being told that there is a great maize variety out there drought tolerant, and you have to pay for it, There’s a real fear that, while it might provide some sort of yield in 4 years out of 5 In the fifth year, there could be a very bad year and the farmers don’t get any yield, and they’ve had to purchase that product and then they’re in a particularly bad situation. We’re working with a number of partners to look at how we can mitigate the risk faced by farmers, and by virtue of doing that enhance their willingness to adopt some of these new technologies. And one of the practices or tools that we’ve been looking at is something called index insurance. If rainfall for example falls below a certain amount at a key time in a crop’s development, that will trigger a payout to a farmer, or a whole group of farmers. So for example in Kenya there’s a very interesting initiative whereby farmers buy seed, and in the packet of seed there’s a scratch card. And when they sow their seed they SMS a message with the code, to a particular telephone. and that’s registered by the insurance company. Just because the insurance industry is a private sector and wishes to make money doesn’t mean that it doesn’t have a key role to play in ensuring that there is good climate change adaptation on the part of farmers and large degrees of poverty reduction. If done correctly, this can be a real win-win situation and there are increasing actors who are recognizing that.

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