Two million African smallholder farmers covered – but this is just the start

Swiss Re exceeded its commitment to cover 1.4 million smallholder farmers in Africa by 2017. But to feed Africa and the world in future, more needs to be done.

In 2012, Swiss Re's CEO Michel Liès committed the company to providing insurance coverage to 1.4 million African smallholder farmers by 2017. Today we can announce that we met our promise early and even exceeded our initial goal. 2 million African smallholder farmers now have protection if their harvests are destroyed by drought, floods or other natural perils.

Having this protection allows them to keep on farming in the face of disaster. How important this protection is became clear in the recent drought affecting Kenya. When a harvest for seed farmers was lost, a payout by the Kilimo Salama (now ACRE) program , initiated by the World Bank's Global Index Insurance Facility (GIIF) and supported by Swiss Re Corporate Solutions, kept farmers in business. They could buy seeds and fertilizer for the next growing season.

Protecting farmers in the times of global warming

ACRE is just one example on how to bring insurance, which is normal to the majority of farmers in the developed world, into emerging markets. The need for this type of protection will increase in the coming decades. According to the World Bank climate change will endanger food security in most countries with current agricultural practices and varieties in the future ahead.

With 65% of the workforce employed in agriculture (PDF, 1.81 MB), millions of Africans not only depend on farming for their food but also for their incomes and livelihoods. Without enough rain to feed the land, the effects can be devastating. In addition to the human suffering caused by famine, the costs of aid relief and falling revenues can have a severe impact on the local economy, sometimes wiping out years of hard-won development gains. Often this results in political instability impending even more the development of the countries affected.

Food for a growing population in a more urbanized world

The vicious cycle described above therefore must be broken. This will become even more important in a world with a growing and more urbanized population. People in cities don't farm anymore. They need food from a stable on productive farming sector. Agriculture in the emerging markets therefore must make a transition from subsistence – which feeds just the farmers themselves – to commercial farming.

To do this there must be a shift in the mindset of farmers, governments and NGOs. "As long as we continue to promote farming as subsistence and not as a business venture I do not see our agriculture sector growing and competing with the other sectors" says Shadrek Mapfumo from the International Finance Foundation in South Africa.

Building blocks for this change of mindset are funding by banks, a change of attitude in governments and NGOs to get subsistence farmers to grow more than what they need and insurance, to keep them farming if natural perils destroy their harvest.

Transforming farming will transform economies

The Food and Agricultural Organization of the UN estimates that two thirds of the world's food is grown by smallholder farmers. Getting them to produce surplus food will not only help us to feed the world of 9 billion in 2050; it will also help them to get out of the poverty many live in today.

And this not just in Africa but across the globe. Providing insurance to two million in Africa therefore is the start of a journey that must continue. That it is possible has proven itself. Covering more than initially planned at an early point in time than anticipated shows what can happen if governments, NGOs and the private sector partner in shaping the future.

Published 22 January 2015

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