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Improving the livelihood of smallholder farmers
Agriculture Index Insurance: Kilimo Salama
Can cell phones beat drought? The Foundation's insurance program helps smallholders deal with weather and other risks.
Around the world, millions of smallholders are facing the effects of climate change. Extreme or erratic rains, flood and drought threaten their livelihoods. Most of these farmers work five hectares or less, often in remote areas. In Kenya, the agricultural sector employs three-quarters of the working population. In a bad season, they can lose their entire harvest, and lack the money to buy quality seeds and other inputs for the next growing season. Kilimo Salama is an agricultural insurance product that helps farmers cope with climate change and devastating weather shocks.
The Kilimo Salama Model
Kilimo Salama means "safe farming" in Swahili.
Insurance should be simple, affordable, and relevant to small farmers. Kilimo Salama insures farmers against drought and excess rain. Launched in Kenya in 2008, it is now the largest agricultural insurance program in Africa. Kilimo Salama is the first such program worldwide to reach smallholders using mobile phone technology.
A farmer can try out insurance for as little as ten US cents, to insure a bag of seed costing $2. If there is a drought, for example, the farmer will receive a payout of two dollars, and can begin afresh at the next growing season.
By October 2013, Kilimo Salama was insuring over 150,000 farmers in two countries. Previously, few of them could afford such cover because of the high costs. Traditional crop insurance relies on expensive farm visits to verify claims. Kilimo Salama does not visit the farms. Most of the program is designed specifically for smallholders. It uses automated weather stations and mobile payments. These dramatically reduce administrative costs, enabling a premium price that millions of farmers can finally afford.
Kilimo Salama is funded through the Syngenta Foundation and the Global Index Insurance Facility (GIIF). Launched in 2009, the Global Index Insurance Facility is a multi-donor trust fund financed by the European Union, Japan and the Netherlands and implemented by IFC and the World Bank.
Our vision is for agricultural insurance to be as common on a farm as fertilizer should be.
Kilimo Salama’s use of technology is the key to the microinsurance product’s affordability and the model’s scalability. almost all Kilimo Salama’s clients are smallholders scattered throughout rural areas. To reach them, the program partners with agricultural microcredit institutions and other partners, as well as local "agro-vets". These are the stockists who sell farming inputs like seeds, fertilizer, and crop protection products.
An automated weather station installed in East Africa. The station collects and automatically transmits measurements to the Kilimo Salama cloud-based server every 15 minutes.
Kilimo Salama now comes in various forms and covers a wide range of risks. More are planned. The initial model was based on retail transactions: When a farmer purchases insurance, the microcredit officer or agro-vet registers the purchase by scanning a code using a specially-developed mobile phone application. The message goes to a cloud-based server that administers the policies. It then sends the farmer an automated SMS with his or her policy number.
Solar-powered weather stations collect the weather data. At the end of each growing season, they are automatically compared to an index based on historical weather data. If the season's rainfall is 15% above or below the average, the insurance payout owed to client farmers is calculated and sent via automated mobile payment. There is no "claims" process.
By reducing their risks, insurance encourages farmers to invest in their farms. This way, they can raise their yields. Findings with Kilimo Salama by October 2013 suggest that insured smallholders step up ther farm investment by about 20 percent.
In November 2013, Kilimo Salama published testimonials from farmers with dairy insurance*. See what they say.
Here is a film made in connection with the November 2013 Tech Awards, at which Kilimo Salama won the Flextronics Economic Development Award.
October 2013 Kilimo Salama wins an award from AON for innovation.
*February 2013 Kilimo Salama extends insurance in Kenya to dairy cows. Here are the media release and a local TV clip.