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Why Agricultural Insurance Is Out Of Reach For Farmers

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By Agnes Nantambi  

Researchers at Makerere University are calling for redesigning of the agricultural insurance to make it adaptable and affordable to farmers.

Currently the type of insurance being offered to the farmers is either for insuring against one kind of risk or enterprise yet most of the farmers in Uganda are subsistence but with varied enterprises.

“Most of them have cassava, chicken, maize, cows all requiring different policies for each enterprise. The farmers want a policy which can cover the entire farm and take care of the different risk of the different products or enterprises. This calls for redesigning the type of insurance being offered to suit into what farmers want, “said Dr. Florence Lwiza a lecturer from the Department of Agri-business and Natural resource economics.

Speaking during the annual general meeting for the Uganda Agricultural Economics Association, Dr. Lwiza stressed that even though the insurance is there, and subsidized heavily by the government, but still not many farmers are able to afford it.

“If there could be ways of bringing down the cost of insurance, so that more farmers can be able to take it up, preferably in a sustainable way, many farmers will be able to take it up, “she said.

She explained that the study on economic evaluation on weather induced risks in Uganda conducted in Central and Western Uganda between 2019-2020, found out that the farmers are willing to take on the agricultural insurance because they see the likely value but need more information.

The study showed that farmers are not aware of the existence of the agricultural insurance. Even though we see statistics on paper that there is an agricultural insurance being offered, but many of them are not aware, they don’t know how it operates and don’t know where to go to acquire it.

“If there could be an outreach to continue educating farmers especially outside Kampala, it could be a one way to keep the farmers interested in accessing it.

We found out that farmers already have ways of minimizing the loses and risks through diversifying their production, investing in assets just in case the crops fail, have some livestock available in addition to saving in different saving groups such that in case of any failure, they can be able to grow from the savings to be able to overcome the negative effects, “he said.

Regarding the formal and informal agricultural insurance, the study proved that the formal insurance can complement the informal methods but do not replace their value but rather can be channeled through the existing groups since they are already working well with farmers.

“The issues of affordability and investing in something one is not sure of was much highlighted as this looked like a gamble, but if there could be means of increasing awareness and access to information about the likely future effects of weather on production, this would work well, “she said

Some of the contestants who took part in the elections of the positions of the association at Makerere University. Photo by Agnes Nantambi

The study also found out that farmers are willing to pay from their own pocket but the times of payment was not favoring them. if you are paying at the beginning of the production season, yet they get money in the harvest season, they would rather pay at the harvest season, than having to wait at the beginning of next year.

Prof. Bernard Bashaasha the former principal college of Agricultural and environmental sciences said the uptake of agriculture insurance is still low in Uganda yet it’s one of the critical inputs needed to protect farmers against risks.

“It’s not only climate risks emphasised but also other forms of risks like price collapsing. In other countries, insurance goes beyond climate and production but covers the entire value chain.

In our case, we are still short of appropriate portfolios that are suitable to our small holder farmers because some of the insurance portfolios we have, are too expensive and cumbersome with high transaction costs to be able to benefit the farmers, “he said.

Bashaasha observed the need for the insurance subsector to be innovative and come up with real products that can suit our type of farming in addition to being enterprise targeted because what is done for coffee is not what is done for diary.

Prof. Bashaasha who was also voted as the new president of the Association pledged to serve selflessly by coming up with a five-year strategy aimed at promoting impactful research which can inform and influence policy in addition to, mentorship for the young scientists to enhance visibility.

Hellen Karambasaizi an urban farmer said she was not aware of the existence of the agricultural insurance saying if made known to them, they would take part in it.

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