HomeAgricultureClimate financing boon for Zim agriculture

Climate financing boon for Zim agriculture

Developing agriculture remains Zimbabwe’s most direct route to reducing poverty, hunger and malnutrition given that 67% of the population resides in rural areas and relies on smallholder farming as a source of livelihood.

The transformation of agriculture entails developing a robust sector that has mainstreamed mechanisms of reducing vulnerability of, and maintaining and increasing the resilience of farmers and farming systems to negative climate change impacts.

Of late, for the 2021 season, the Agricultural sector has recorded a huge growth, with a confirmed figure of 36,4%, pushing the agriculture economy from a value of US$5,2 billion to US$8 billion agriculture economy. The jump is closing the gap between the target of US$8,2 billion by 2025 and the current rating.

The economy has been painted white after harvesting above three million metric tons of cereals having recording an average of over 180% growth in the production of agriculture commodities from traditional grains to maize, which is the key staple crop.

The growth is a manifestation of the effort and continued implementation of the provisions clearly articulated in the Agriculture and Food Systems Transformation Strategy (AFTS) of the ministry of Lands, Agriculture, Fisheries, Water and Rural Development.

Under the AFTS, the ministry is using the Climate Proofed Presidential Input Scheme, commonly referred to as Pfumvudza, to increase production, productivity, food and nutrition security among the farming communities.

The Pfumvudza programme is based on conservation agriculture principles and it helps to climate-proof production to certain extent. Although according to the results of the 2021 Crop and Livestock Assessment Report by the  Lands, Agriculture, Fisheries, Water and Rural Development ministry, the average maize yield for farmers under Pfumvudza was higher than for non-Pfumvudza farmers, there is scope in understanding and acting against climate change and its potential impact.

Smallholder farmers in Zimbabwe are increasingly exposed to systemic climate change risks such as droughts, dry spells, delayed seasons, floods, hailstorms, pests, diseases and many more.

The Lands, Agriculture, Fisheries, Water and Rural Development ministry has upgraded its agricultural transformation strategic options basket by bringing in a crop insurance product pioneered in the region. The inclusion of the Area Yield Index Crop Insurance in the basket of inputs for Pfumvudza/Intwasa smallholder farming beneficiaries under the technical guidance of Pula Advisors is meant to protect the farmers from the heavy impact of climate change vagaries.

Speaking on behalf of Pula Advisors, regional manager for Anglophone Africa Cynthia Tapera said:  “Pula Advisors designed the Area Yield Index Crop Insurance to insure farmers’ harvest in the Zimbabwean region. It is an insurance cover that insures farmers against a pre-set historical benchmark.”

“The perils covered in this product are windstorm, frost, excessive rainfall, heatwave, hail, flood, drought, pest and diseases. The pilot will focus on the maize value chain. Climate change is upon the whole world, the results are clear for everyone to see and the damaging impact is felt by the smallholder communities with no other sources of income other than agriculture.”

In order to be able to verify usefulness, relevance and have proof of concept for the Area Yield Index Crop Insurance, the Lands, Agriculture, Fisheries, Water and Rural Development ministry is starting this 2021/22 agricultural season with a pilot exercise with financial support from a highly committed development partner called Mercy Corps.

Pula Advisors GmbH (Pula) has been contracted by Mercy Corps’ AgriFin Digital Farmer 2 (ADF2) to provide technical assistance for the design and implementation of a comprehensive Area yield index insurance on the inputs distributed under the Pfumvudza initiative in Zimbabwe.

Mercy Corps’ AgriFin Digital Farmer (ADF2) is a two-year, $5 million initiative that aims to support the expansion of high-impact, digitally-enabled services to at least one million farmers and to expand the services to a further five million smallholder farmers in partnership with Gates and Bayer Foundation. These expansion efforts will be delivered by growing ecosystems of diverse service providers and building farmer income, productivity and resilience by 50% while reaching 40% women.

Speaking on behalf of the government, permanent secretary in the Lands, Agriculture, Fisheries, Water and Rural Development ministry John Basera said: “The ministry established a task team chaired by the Agricultural Finance Cooperation (AFC) Insurance to collectively model out piloting of the Area Yield Index Crop Insurance.”

“The Task Team comprised of the ministry and relevant stakeholders are being technically advised by Pula Advisors and they have so far green-ticked a number of key elements and are ready to roll the trial run during this 2021/22 agricultural production season covering farmers under the Pfumvudza/Intwasa programme.”

The chief director Strategic Policy Planning and Business Development in the  Agriculture ministry Clemence Taderera Bwenje highlighted: “This piloting exercise will be very exciting as it is premised on the objective of providing proof of concept, showing the benefits, costs, relevance and possibility of scaling out the Area Yield Index Crop Insurance next season.

“The evaluation to be produced by the task team will be very instrumental in informing policy, the farming community, stakeholders and government as it will highlight on the quality and scalability of the insurance product.”

Basera added: “The piloting of the Area Yield Index Crop Insurance will this season be undertaken in Rushinga and Mwenezi districts covering about 30 000 smallholder farmers under the Pfumvudza programme for a sum insured of over US$1 million”.

“Recognising the value likely to be created, the ministry commits itself to fully supporting the associated activities and has activated its structures and institutions to ensure the piloting exercise is a success”.

Basera applauded FBC Insurance Pvt Ltd for coming on board as the insurer for the pilot exercise.

Bwenje emphasised that the overarching impact of rolling out such insurance products is to sustainably and affordably protect smallholder farmers from key agricultural risks through the use of insured inputs, which in turn encourages better farming practices, raises yields, and provides compensation (payouts) to support farmer resilience when losses occur.

Other insurance products have been shunned by the farming communities in the past and the call has been on the design of an innovative product that is alive to agricultural realities.

The scalability of the concept beyond the initial pilot is an important consideration for all the partners.

Scalability is ensured through the catalytic and demonstration effect to be created by this initial investment from Mercy Corps.

  • This article was made possible by   the Lands, Agriculture, Fisheries, Water and Rural Development ministry with support from Pula Advisors GmbH (Pula) and Mercy Corps’ AgriFin Digital Farmer 2.

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