Old Mutual flexes for smallholder farmers

15 Jul, 2019 - 00:07 0 Views
Old Mutual flexes for smallholder farmers OLD Mutual Zimbabwe

The Chronicle

Harare Bureau

INSURANCE giant Old Mutual Zimbabwe says it is in the process of re-designing agricultural insurance products to cater for smallholder farmers.

Zimbabwe is still largely an agricultural-based economy, with the latest population census (2012) showed that over 60 percent of Zimbabweans are employed in the agricultural sector, or at least derive their livelihood from agriculture and other related rural economic activities.

But agricultural production is also vulnerable to periodic droughts and climatic vagaries, which meant the majority of farmers’ means of production was highly exposed. 

Old Mutual head of claims, Mr Kuda Rufudza, said there was need for appropriate insurance packages for communal farmers, and the institution was piloting a number of products.

“In Zimbabwe agriculture insurance has been around for a long time, but the focus has been mainly on corporate clients. But when you look at agriculture in Zimbabwe you then find that the majority of farmers are the communal farmers,” he said at a recent ZimSelector-IPEC workshop.

“The (insurance) products that have been there have not been designed for that type of clientele. 

“What is happening now is that this is a community that needs insurance more than anyone else, and this is a community for whom products are now being developed. 

“Some have been in pilot phase for three years, or five years.”

Experts say, ideally, the indemnity-based agricultural insurance products are most suitable for communal farmers as such products assess the crop loss and insurance compensation on-site based on the real loss at the policyholder level.

Mr Rufudza said in terms of some of the new adjustments in agricultural insurance products, there has been a shift towards input-based products compared to yield-based products.

Agricultural insurance for communal farmers is particularly important insofar as the country is currently in the midst of a severe drought that has caused large-scale crop failure throughout the country, which has made it difficult for farmers to maintain healthy livestock and grow crops. 

Zimbabwe’s agricultural sector has been shown to be very vulnerable to risks and constraints such as drought, floods and hailstorms.

At its core agriculture insurance is a financial contingency that transfers production risks from the farmer to the insurer.

To this extent, it helps to stabilise the farmer’s incomes, protects assets and hence cultivate socio-economic development. 

However, the lack of suitable insurance packages for communal farmers means the smallholder farming sector has not historically contributed as much as it could have to the broader economic performance.

But local insurance firms such as Old Mutual are increasingly developing packages for Zimbabwe’s smallholder farmers.

Share This: