new study shows that weather-based insurance will help smallholder farmers to withstand the effects of climate change and market shocks. The study was launched recently in London where Nigerian officials also gathered to learn how they can implement the program for their farmers.
The report, "Scaling Up Index Insurance for Smallholder Farmers" was carried out by the CGIAR Research Program on Climate Change, Agriculture and Food Security, (CCAFS), and the International Research Institute for Climate and Society at Columbia University in New York. It showcased projects that have overcome many of the challenges that have hindered famers from having access to index insurance.
This type of insurance provides support to small farmers when there’s not enough rainfall to grow sufficient yields. The insurance is based on a specific “index” – for example wind speed or rainfall for crops.
Dr. Debisi Araba, the team leader for the Environment and Climate Change Unit for Nigeria’s Ministry of Agriculture, explained the appeal of the insurance to food producers in his country.
“Nigeria has about 15 million smallholder farmers, and it’s our aim to ensure that each of those farmers not only remain productive but are able to cope with the shocks and stresses of weather induced climate change.”
“In 2012, we had massive floods along the east and southern parts of the country. And this not only affected the livelihoods of the farmers but it also made us acutely aware that farmers needed to be insulated from the shocks and stresses of climate change and one of the methods that we want to use is index insurance,” explained Debisi.
He said CCAFS scientists provided them with a technical workshop in London where they designed a weather-index insurance program for small-scale farmers in Nigeria.
Dan Osgood, lead scientist of the financial instrument sector team at International Research Institute for Climate and Society at Columbia University and also the co-author of the study, explained how the index insurance program can improve the lives of smallholder farmers.
“For many farmers, climate change means more bad years, and so adaptation means taking advantage of the remaining normal years and being more productive in those years—you know, basic math," he said. "The problem is the kinds of things that you can do to become more productive like using a quality seed or taking out a loan for some inputs or buying an ox to be able to plow, those things involve taking a chance.”
“So even if four years out of five you have four years that are OK,” he continued, “if you have one year out of five that’s bad, you don’t know if that’s the year that you’re making this decision to invest in something like an ox or quality seeds. And if this is the year, then you can fail completely and lose the farm.”
Debisi said in Nigeria, one of the biggest challenges to implementing insurance as a safeguard against losing the farm is having access to data.
He said access to data used to be a constraint. Now they have concluded they have enough data to develop an insurance mechanism.
“We’re working with the IRI — International Research Institute of Columbia University -- to work with the Nigerian Meteorological Agency -- where we’re going to collate all the data that we have from the weather stations across the country both at the federal and state levelsm" he said. "We’re going to synthesize these and produce high quality information that will form the backbone of the weather index insurance.”
The new crop insurance program would incorporate other programs already in existence.
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