Expand covers for smallholder farmers urgently

Wednesday May 19 2021
New Content Item (1)

In April, 2019, The Ministry of Agriculture and Animal Resources launched the National Agriculture Insurance Scheme (NAIS) meant to mitigate risks and losses incurred by farmers due to unpredictable natural disasters, pests and diseases that affect their livestock and crops.

Dubbed “Tekana Urishingiwe Muhinzi Mworozi,” the scheme is subsidised up to 40 percent by the government to enable the farmers to easily access financial services and ensure flow of credit to the agriculture sector. Farmers are expected to pay 60 percent of the premiums. In the initial phase, livestock insurance will cover dairy cattle in eight selected districts while the crop insurance scheme will cover maize and rice farmers in 10 districts.

Yet over a year later, uptake by farmers has remained low while insurance firms are up in arms that premiums are too low, forcing them to incur losses.

The government should consider additional insurance subsidies for smallholder farmers and ensure that farmers are encouraged to plant cover crops when natural disasters prevent them from planting or destroying their cash crops. Increasing the current subsidy targeting specific smallholder farmers would encourage uptake before insurance firms begin withdrawing the product from the market and protect the nascent agriculture insurance market.

With climate projections suggesting more frequent and extreme weather events, farmers are looking to better understand, develop and adopt risk management strategies to manage uncertainty and maintain business continuity.

Insurance has an important role to play, but there is work to do to develop appropriate insurance products for farmers and provide more affordable and relevant insurance options. The first major benefit of agriculture insurance is that it aids in fighting poverty.


A natural disaster is unpredictable. When they happen, farmers who have invested heavily in agriculture get their investment destroyed. This, in turn, makes them poor. If the farmer had bought the insurance, the companies compensate them.

With the money paid out, farmers are in place to reinvest in farming and other agricultural activities making them rich again.

To ensure that the insurance deal becomes actuarially sound, the existing program needs to improve the current methodology used to set premiums including rewarding farmers for practices that make crops more resilient.

For instance, it should take into account a farmer’s production history, and as yields improve through the adoption of new tools, techniques, and technologies, rates should be lowered to reflect reduced risk. Perhaps more importantly, a robust information system needs to be put in place to help farmers plan and schedule their harvest and yield.

With the help of crop insurance, farmers will benefit by becoming self-sufficient. They will also be able to raise their investment in crops to get better quality produce.