In Africa, Harvesting Hope Starts With Reducing Risk

The following is a guest post by Dr. Marco F.  Ferroni, Executive Director, Syngenta Foundation. An expert in international agriculture and sustainability issues, Dr. Ferroni joined the Syngenta Foundation in 2008, after a career in multilateral institutions and government. Before joining the Foundation, Dr. Ferroni worked at the Inter-American Development Bank (IDB) and the World Bank in Washington DC. As a Deputy Manager of the Sustainable Development Department of the IDB, he had responsibility for regional sector policy and technical support to the Bank’s country departments. As a senior advisor at the World Bank he advised on donor relations and directed work on international public goods and their role in foreign aid and international affairs.

Earlier in his career, Dr. Ferroni was an economist and division chief in the government of Switzerland, working in development cooperation. He holds a doctoral degree in agricultural economics from Cornell University. Dr. Ferroni has worked in Latin America, Africa and Asia and is a frequent lecturer and guest speaker on topics that include agriculture, food security, development finance, and trade

Today, there is widespread agreement that improving agriculture is critical to dealing with crushing poverty in sub-Saharan Africa, which has hovered at a stubborn 50 percent for decades. The reasoning is simple: the vast majority of Africa’s poor are smallholder farmers who depend on crops cultivated on modest plots of land to feed their families and earn a little money.

The vast majority of Africa’s poor are smallholder farmers who depend on crops cultivated on modest plots of land to feed their families and earn a little money. (Photo credit: Bernard Pollack)

In the area of finance, giving farmers small loans—something known as “microfinance”—for purchases of high-yield seeds and inputs has been touted as a “silver bullet” for African farmers. Microfinance has been widely hailed as an opportunity for farmers to invest in their own harvests. But many farmers viewed taking on debt as just compounding the many risks they already face—chief among them being a reliance on rains to nourish their fields.

Thus, the essential dilemma remains: how can a farmer minimize risk so she can maximize production in a world where weather trumps all? Today, the hot idea in developing country agriculture is to create inexpensive insurance plans—micro-insurance instead of microfinance—that can give farmers the protection they need to make investments in production without burdening them with another risk.

Last year, the risks inherent in African agriculture were on display in Kenya as a crushing drought scorched fields and pushed millions to the brink of hunger. But at least 200 Kenyan farmers emerged from the drought in a much stronger position than usual. They had participated in a pilot program in which a five percent surcharge on the price of seeds or fertilizer bought drought insurance. When the drought hit, the insurance allowed them to recoup much of their investment and begin the 2010 season with high-yield seeds and soil inputs that offer a rare opportunity to make a rapid recovery.

Earlier this year, the same “pay as you plant” micro-insurance plans were offered to thousands of farmers throughout Kenya. The insurance emerged from a partnership between the Syngenta Foundation for Sustainable Agriculture, UAP Insurance (which is East Africa’s largest insurance provider) and mobile phone operator Safaricom.

The policies are inexpensive—the cost to the farmer can be as low as a few shillings to insure a bag of seeds or fertilizer—and accessible: they are sold in rural stores where farmers come to purchase everything from soft drinks and veterinary medicine to cell phones and scratch cards. The policies use new technologies to reduce costs and gain farmers’ trust.

Merchants use cell phone cameras to scan a bar code which automatically registers the policy via a text message to both the insurance company and the farmer. The phones also link the policy to one of 30 weather stations, all of which have been outfitted with solar-powered data gathering devices that determine when extreme conditions threaten harvests.

When the data indicate threats, the insurer can immediately dispatch payments to farmers through Safaricom’s M-PESA mobile phone money transfer service, which has become extremely popular in rural Kenya. The first set of payouts were made in September 2010 to farmers in Embu.

Also, rather than relying on subsidies to make the policies affordable, private sector seed and fertilizer companies match the farmers’ five-percent payment. This premium sharing makes sense because agri-business companies have a vested interest in farmers’ becoming regular customers.

The initiative, known as Kilimo Salama (“safe farming” in Kiswahili) features many elements—like the mobile phone registry, payment system and distribution through rural retailers—that are micro-insurance firsts. At the very least, it will provide much-needed insight into what it takes to make micro-insurance acceptable and effective for poor farmers.

It’s also a clarion call for creative thinking in the world of agriculture aid. There is no reason for Africa’s fate to remain a continent defined by famine and food shortages. African farmers are among the most resourceful in the world. They can coax crops to life in the harshest growing conditions imaginable. Combine this ingenuity with modern farm inputs and micro-insurance, and Africans could begin harvesting hope in a region that has cultivated far too much despair.

An expert in international agriculture and sustainability issues, Dr. Ferroni joined the Syngenta Foundation in 2008, after a career in multilateral institutions and government. Before joining the Foundation, Dr. Ferroni worked at the Inter-American Development Bank (IDB) and the World Bank in Washington DC. As a Deputy Manager of the Sustainable Development Department of the IDB, he had responsibility for regional sector policy and technical support to the Bank’s country departments. As a senior advisor at the World Bank he advised on donor relations and directed work on international public goods and their role in foreign aid and international affairs.

Earlier in his career, Dr. Ferroni was an economist and division chief in the government of Switzerland, working in development cooperation. He holds a doctoral degree in agricultural economics from Cornell University. Dr. Ferroni has worked in Latin America, Africa and Asia and is a frequent lecturer and guest speaker on topics that include agriculture, food security, development finance, and trade

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