Covid-19 may have forced the postponement of UN climate change talks until 2021 but for millions of small-scale farmers around the world, risk management solutions for the combined impacts of the pandemic and extreme weather events cannot wait. Globally, fewer than 20 percent of smallholder farmers are covered against unexpected events.
Climate change and natural disasters represent one of the major challenges facing the planet. They exacerbate the vulnerability of low-income households and MSMEs, particularly in developing countries to existing risks: lack of access to healthcare, loss of rural and urban livelihoods and untimely death. Working to manage these risks and protect these vulnerable households and MSMEs is therefore a critical part of building their resilience to climate change and natural disasters.
Family farms account for around three-quarters of the world's agricultural land, the vast majority of them smaller than five hectares. Inclusive insurance can help them manage risks and adapt to shocks, as well as transitioning to more sustainable farming and improved food security. Just three percent of farmers in sub-Saharan Africa have any insurance. Even in Asia (22 percent) and Latin America (33 percent) there is still a significant insurance gap.
However, it’s not all gloom and doom. MiN members are already working to mitigate the impact of climate change through inclusive insurance products.
In Zambia, where a severe drought in 2019 led to 2.3 million people requiring emergency food assistance, smallholders are struggling with the compounding effects of the coronavirus. According to MiN member and 2020 Nobel Peace Prize winner the World Food Programme (WFP), the pandemic has aggravated existing vulnerabilities by disrupting supply chains and increasing farming costs.
However, thanks to WFP’s long-running Rural Resilience Initiative (R4), around 7,800 Zambian farmers benefit from index-based drought insurance which triggered payouts totalling US$ 452,170 in 2018/19. Surveys show that insurance payouts were mainly used to purchase food, agriculture and livestock inputs, cover basic needs and livelihood investments. The insurance is provided on the condition that participants apply Conservation Agriculture (CA) measures in their production practices.
This two-pronged approach - protection and resilience - means farmers are better able to cope with extreme weather. “Last year, despite the drought, we managed to have a harvest because we embraced this sort of conservation agriculture. Families practising traditional farming had zero,” says Godfrey Hapaka, a smallholder farmer from Monze District in southern Zambia and one of those in the WFP R4 scheme. “I was not only encouraged to apply conservation agriculture, but also to diversify by using drought-tolerant crops such as cassava and cowpeas. These have a better chance of surviving dry conditions because they mature earlier.”
In West Africa, AXA has partnered with a series of different players to launch different index insurance products for small-scale farmers in Senegal, Cameroon and Cote d’Ivoire. The upcoming Landscape of Microinsurance 2020, due to be launched at next week’s International Conference on Inclusive Insurance will highlight these as well as much more.
Another long-standing member of the Network, Luxembourg-based NGO ADA, recently launched a new programme aiming to “sustainably upscale the safety nets of smallholder farmers in Africa, Latin America and Asia by boosting the development of agricultural value chains.” In partnership with the Swiss Agency for Development and Cooperation (SDC) – another Network member, and the Luxembourg Directorate for Development Cooperation and Humanitarian Affairs, the Smallholder Safety Net Upscaling Programme (SSNUP) is a ten-year, €55 million programme to devise, test and develop financial and non-financial solutions for agricultural risk mitigation.