Bundled crop insurance products

This solution was shared by PRE-LAUNCH RESEARCH TEAM , 14 May 2021

Print date: 14 April 2024 10:23

Description of the innovative solution

Collaboration Community building Finance Sharing economy Women empowerment Subsidy Agricultural development Agricultural extension Capacity building Crop breeding Investment fund Micronutrients Irrigation

A barrier for increased vegetable production is that farmers, particularly small farmers, may have to give up staple food space if they want to change to vegetable production. This risk is increasing with climate change. Mechanisms to protect the livelihoods of smallholder farmers are necessary to assist in producing more vegetables and diversity beyond staple crops. This innovation includes crop insurance products and subsidies as mechanisms to assist in establishing vegetable production. The insurance would come bundled with the seeds, and would reimburse farmers should disease spread. The payouts could be financial as well as in high quality seeds, irrigation or other assistance to help re-establish production.

Primary users

Subsistence farmers
Small & medium commercial farmers
Seed industry
Women
Children & youth
Local populations

Dietary impact

Offering farmers bundled crop insurance products can enable farmers to take greater risks in which crops they choose to plant and how they choose to plant. When combined with agroecological techniques, for instance, this can allow for farmers to generate greater yields on their fields than had they relied on more familiar farming techniques. These more abundant harvests can help decrease food insecurity in households, as well as ensuring greater incomes for farming households to spend on necessary food for their families. However, even in seasons when crops fail, crop insurance bundles help to offset the majority of losses felt by farmers, helping to prevent farmers from falling into debt which may have led to an inability to purchase sufficient food for their households in the past. Thus, with crop insurance bundles protecting the incomes of farming households, they can have a significant impact on decreasing food insecurity in rural communities.

Planetary impact

With bundled crop insurance removing much of the risk for smallholder farmers when starting new types of crop production, this can enable farmers to have greater leeway in implementing innovative farming practices that many may have avoided in the past due to fears of failed harvests. For instance, with the promise of insurance no matter if a season has unexpected weather shocks, farmers may experiment with planting different types of crops that they may not have traditionally chosen, which can help diversify plots and increase local biodiversity. In addition, such innovative agricultural practices can also have the added benefit of increasing soil health and decreasing runoff pollution as farmers lean towards more agroecological methods instead of relying on (for instance), pesticides.

Equity impact

By protecting farmers financially from unpredictable weather shocks that may adversely affect crop harvests, bundled crop insurance products can help maintain farmers' livelihoods, especially smallholder farmers, who may have in the past gone into debt due to poor harvesting seasons. This is especially important as climate change continues to exacerbate weather conditions, with the worst effects often felt by poorer, rural communities and smallholder farmers who've often been the smallest contributors to this problem in the first place. Additionally, crop insurance programs can also help to uplift women farmers, especially those who may just be starting out. This is especially important since women tend to receive lower returns on their products when selling in markets, causing a noticeable income gap between women and men which can limit women's social mobility. Furthermore, in general, the existence of crop insurance bundles can help draw in greater numbers of people into agriculture including the younger generation by propping up farming as a potential career path with a more stable income.

Main concerns

- Even with the promise of insurance, some farmers may be wary of accepting these bundles especially in new markets where the farmers haven’t personally experienced or heard about success from their peers. One way to combat this is to combine both financial and non-financial services within the bundled insurance, such as offering farm credit with seeds. Still, there may be the requirement of having extension workers or employees of the institutions offering these insurance plans to perform outreach to both raise awareness of this program and also to talk to farmers to both explain what the policy is as well as hear from farmers about which services would be most beneficial to them, which can help shape the composition of the bundled insurance products to be more effective for local farmers.
- May require the mobilization of financial institutions in the region in order to support this program, which can be difficult if there are none or if the only ones available are underdeveloped.

Supply chain segment

Financial aspects

Maturity level

Moving to scale

Criteria

Food availability Climate mitigation Climate adaptation Water use Soil health Reducing biodiversity loss Increasing agrobiodiversity Reducing pollution

SDG target

SDG 1: No Poverty SDG 2: Zero Hunger SDG 3: Good Health and Well-being SDG 5: Gender Equality SDG 6: Clean Water and Sanitation SDG 8: Decent Work and Economic Growth SDG 10: Reduced Inequality SDG 13: Climate Action

Context

Rural

Examples and additional resources

Real-world examples

See this solution in action in different contexts and settings around the world

Greater Rural Opportunities for Women (GROW)

Project information

Insurance products protecting numerous market actors including farmers, agro-processors, financial institutions, and input dealers, in the event of crop failure due to extreme weather conditions like drought, excess
rainfall, or floods.

Ghana

meda.org/growlearn...rmers/file

Shared by PRE-LAUNCH RESEARCH TEAM

Additional resources

Learn more about this solution through studies, articles, business cases, and other information

Best practices for subsidizing agirucultral insurance

Scientific paper

Highlights the importance of agricultural insurance while also examining some of the pitfalls and main concerns that governments should have when designing such policies.

sciencedirect.com/scien...300458