Kenya’s agricultural sector, which contributes about 20 percent of the country’s GDP and employs more than 40 percent of the population, faces increasing challenges due to climate change.
The Food and Agriculture Organization estimates a staggering 490 trillion shillings ($3.8 trillion) of crop and livestock production have been lost over the past 30 years due to disaster events, with an average of 15.9 trillion shillings ($123 billion) annually due to disasters.
This vulnerability, coupled with the growing global demand for food, requires innovative solutions to protect farmers and ensure food security.
As the government, cooperatives, and farmers themselves embrace new technologies and diversification strategies to mitigate crop failures and livestock deaths, insurance is emerging as a critical tool for managing risk and enhancing resilience.
Index-based insurance products, tailored to specific crops and animals in different regions, offer a promising approach. These data-driven solutions leverage technology to analyze and forecast weather patterns, enabling more accurate and timely payments.
Besides immediate compensation for losses, insurance offers broader benefits.
According to insurance research body KFF, insurance facilitates access to loans, enabling farmers to invest in improved inputs and diversify their activities to increase returns. It also strengthens business relationships within the value chain, and enhances trust and cooperation with contractors.
In the event of a disaster, insurance payouts provide a critical safety net, allowing farmers to cover basic expenses, make repairs, and reinvest in their operations, ensuring a faster recovery.
This financial stability protects farmers from the devastating consequences of unforeseen circumstances, sustains their livelihoods and contributes to long-term food security.
Cooperative societies play a vital role in promoting insurance adoption among their members. By educating farmers on the benefits of different policies and recommending appropriate options, cooperatives can enable farmers to protect their investments and ensure the continued productivity of Kenya’s agricultural sector.
This collective effort is essential not only for individual farmers but also for the country’s economic stability and food security.
The writer is Director General of CIC