John Poi Namanjelie, a 44-year-old father of six and smallholder farmer in Bungoma County, western Kenya, hoped he would avoid crop losses and improve his income by growing a diverse crop of vegetables, fruits, maize, beans, bananas and sorghum. However, changing weather patterns and poor-quality seeds resulted in continuous low yields for 20 years on his 1.2-hectare farm.
Enter picture-based insurance
John’s lightbulb moment came in 2020 when a friend introduced him to an insurance scheme developed by the Agriculture and Climate Risk Enterprise Ltd (ACRE Africa). Dubbed Picture Based Insurance (PBI), the project, part of the Cultivate Africa’s Future Fund, a partnership between the Australian Centre for International Agricultural Research and IDRC, relies on imagery of the fields taken with mobile phones to show crop damage caused by extreme weather conditions. The images are reviewed by agronomists to produce payouts. “We had become so used to farming at a loss due to poor yields that we were only looking at getting what we could afford to feed our families and then wait for the next season,” says John. “We could plant seeds from the previous harvest and continue the poor farming cycle for years.”
John was recruited to be a village-based “change agent” or “village champion” of ACRE Africa in 2020 and was trained to use the PBI technology. The same year, he was among 30 other champions in Bungoma County who received training in proper agronomic and sustainable land management practices including mulching (a departure from burning farm waste after harvesting, which undermines soil fertility), intercropping, crop rotation, and agroforestry, and learning the advantages of insuring crops. The village champions then transfer this knowledge to other farmers.
Like the other champions, John is equipped with a smartphone to take images of crops at farms to send to ACRE. He works with 40 farmers to take photos of their crops at various intervals, including before planting, during planting, mid-season, and after planting.
“We use different criteria in recruiting the village champions. Besides factoring in gender and age, we also look for farmers who are ahead of the rest in terms of farming knowledge, have a network of farmers they can efficiently mobilize, and can easily move from their farm to others to train other farmers,” says Patyster Lusweti, ACRE Africa supervisor for Bungoma and Busia Counties in western Kenya.
“The objective of the PBI project is to address the challenges experienced by traditional insurance schemes, where high verification and monitoring costs for the insurer result in high premium costs that exclude most small-scale farmers. Using satellite and smartphone imagery and providing eyes on the ground to observe farm management practices, the PBI scheme addresses the challenges of basis risk [discrepancies between insurance pay-outs and actual farmer losses] and ultimately, poor trust in insurers among farmers. PBI also promotes the adoption of resilient farming technologies and works to improve engagement with smallholder farmers, which helps to further improve trust,” says Lilian Waithaka, PBI project manager.
Signing up to the scheme
To self-register and join the scheme, farmers dial a telephone code and follow prompts that guide them on how to purchase insurance for target crops. They are issued scratch cards to purchase premiums ranging from Ksh50 (CAD $0.56/AUD $0.61) to Ksh1,000 (CAD $11.25/AUD $12.25) and pay through a mobile money service. In addition to providing cover for crop damage, the premium also offers farmers access to certified seeds, advice on crops they have grown and information on weather conditions in their area from agronomists who work for ACRE Africa. “Farmers in the area have warmed up to the insurance, mostly because they have seen the payouts happening and because we, their fellow farmers, are the ones selling the insurance to them. Initially, it was tough selling it to them because of the notion that insurance companies demand high premiums, and it is always a struggle to get them to honour the claims,” adds John.
John also uses a mobile app to log the details of farmers in his network including their names, location, size of their land and the crops they grow, along with whether they have taken out insurance (and what encourages or prevents them from doing so). This information is used to determine the reach of the insurance scheme. “It also helps us understand what kind of crops the farmers are growing, so we know whether to extend the number of crops we insure and how to improve the insurance product as we look to scale. Currently, the program covers maize, green grams, beans and sorghum,” says Patyster.
Counting the payoffs
The improved seeds obtained through the ACRE scheme have translated into bumper crops for John, who increased his harvest from one 90 kg bag of maize to four 90 kg bags. He sells the maize to local markets, fetching Ksh2400 (CAD $27.18/AUD $29.60) each and he is able to rely solely on the money he makes from farming to educate his children, including two children studying at university and two in high school.
For insurance cover worth a Ksh200 premium (CAD $2.25/AUD $2.47) covering an acre of land, a farmer receives a payout of up to Ksh2000 (CAD $22.51/AUD $24.70) in the event of weather-related crop loss. This helps the farmer recover the initial investment in seed input used. John further explains that the comprehensive insurance package, which offers farmers certified seeds, training on good farming practices, and guarantees they will be compensated should bad weather interfere with their crops, is giving more farmers impetus to continue farming. “Among various farmers in my network, I have seen renewed interest in farming as they are able to see the fruits of their labour. In my area, there is growing interest from farmers who were initially skeptical of buying the insurance, and farmers are also now getting more yields — as witnessed in local markets where most of them now trade,” John says.
The project is developed and implemented by a consortium of four organizations; Kenya Agricultural and Livestock Research Organization (KALRO), Agriculture and Climate Risk Enterprise Limited (ACRE Africa), International Food Policy Research Institute (IFPRI) and Wageningen University and Research (WUR) among other stakeholders.