In late 2009, Kenyan farmer Jane Gathoni received a short text message that made her day.
Gathoni is one of the more than 9,500 Kenyan farmers who have "micro-insured" themselves under a new program that assesses crop loss—and subsequent payments—based on climatic data from solar-powered weather stations.
Launched in 2009, Kilimo Salama—a Swahili phrase that means "safe farming"—gives small-scale farmers in Kenya "pay as you plant" insurance, so that if they lose their harvest they can still afford to farm the next season.
Gathoni, a mother of one and caretaker of two orphans, has farmed for the past 11 years on 2 acres (0.8 hectare) of land and joined the program soon after its launch. She used her insurance money to buy new seeds.
"This is a good idea because when you lose from a harvest, there is a fallback to help you buy farm inputs the next season," she said. "This really helps."
Micro-Insurance Made Easy?
The Kilimo Salama concept is a novel, technology-based approach that cushions small-scale farmers who own as little as 1 acre (0.4 hectare) of land against weather-related losses, its proponents say.
African farmers depend largely on rain-fed agriculture, and harvests have decreased in the past few decades because of nutrient depletion in the soil—mostly due to human activities such as mining, according to Keith Shepherd, a soil scientist with the Nairobi-based World Agroforestry Centre.
Many African soils are sensitive, he noted, and if they are not farmed sustainably they degrade easily.
The lack of nutrients has been compounded by unreliable weather patterns, experts say.
"We believe Kilimo Salama can revolutionize insurance and make it accessible to farmers," said UAP Managing Director James Wambugu.
"By using the weather stations to verify local weather conditions, we are avoiding claims procedures that have created mistrust and led people to avoid insurance."
That makes micro-insurance "affordable and attractive" for small farmers, as well as economically viable for insurance companies in a developing country such as Kenya, he said.
Participating farmers pay an extra 5 percent of the value of high-yielding seeds, chemicals, and fertilizers sold by agricultural companies MEA Fertilizers and Syngenta East Africa Limited, which are registered with the Kilimo Salama partnership. These companies match the farmers' investment to cover the full 10 percent premium it takes to cover the program's cost.
When a farmer purchases supplies from one of the two companies, an employee uses a camera-enabled mobile phone to scan a special bar code. That immediately registers the policy with UAP Insurance through Safaricom's network.
An innovative mobile phone application developed by the Syngenta foundation then sends a text message to the farmer's mobile phone confirming the insurance policy.
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Wired Weather Stations
For a farmer to enroll, he or she must be registered with one of Kenya's 30 solar-powered weather stations. Each of these serves an area with a 9- to 12-mile (15- to 20-kilometer) radius.
The solar-powered automatic weather station has a rain gauge with a sensor that transmits information to a remote transmission unit, according to Philip Kungu of the Centre for Training and Integrated Research in Arid and Semi-arid Lands Development (CETRAD) in Nanyuki, Kenya. The transmission unit has a Safaricom SIM card that receives data and sends information out to a central data server.
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Based on established rainfall needs for crops and the automated stations' weather measurements, the system calculates whether there has been a severe drought or excessive rainfall that would warrant farmers receiving compensation for their lost crop.
Farmers entitled to direct payouts get them through a money-transfer system that uses mobile phones. The farmer does not need to show proof of crop damage.
"This is a very innovative way of determining where there was a crop failure from lack of rainfall" or excess of rain, said John Barorot, Safaricom's chief technical officer. Barorot hopes to reach 50,000 Kenyan farmers in the near future.
In the past, "farmers have had to stare in sky whenever rains fail, wondering what will happen," Barorot said, "but [this] innovative product will leverage that."
Program "Valid"—With Conditions
Miguel Robles of the Washington, D.C.-based International Food Policy Research Institute said that the Kilimo Salama project "is a valid and natural idea in the case of Kenya."
"There is some chance for this to work—but there are some necessary conditions for that," cautioned Robles, who is not involved with Kilimo Salama.
For instance, the insurance program has to be simple enough for farmers to understand, he said by email.
Likewise, the program has to respond to the farmers' source of risk—if the insurance program considers only monthly total rainfall, it might not apply if a one-day deluge destroys a farmer's crop, he noted.
"Third, we have to realize that farmers do not care about weather conditions at the weather station—what they really care about is about the weather conditions at their plots," he said.
"Therefore if weather conditions 25 kilometers [16 miles] away from their plot are substantially different, then this won't be a good product for them."
Lastly, the cost might be prohibitive, he noted.
"Farmers might be very interested in the product, but unfortunately because of liquidity constraints at the moment of insurance purchase, it will force them to forgo the opportunity to buy insurance."