Barley insurance scheme launched in East Africa

East Africa Maltings (EAM), a subsidiary of East African Breweries, has launched a crop insurance cover for farmers it has contacted to grow barley.

The policies that are expected to cover the crops beginning the next planting season, are being sold to farmers to cushion them against possible loss of crops through natural calamities such as bad weather.

Mr. Phillip Kalii, the general manager East Africa Maltings said crop cover is part of the raft of measures the company decided to put in place to make barley farming profitable.

Barley growing has been facing stiff competition from other cereals such as wheat and maize, which farmers say earn them better returns.

A study done by Githongo and Associates indicate that barley farmers get only marginal income of Sh20,000 ($300) per acre compared to Sh28,000 ($420) per acre on maize, in what was mainly attributed to the high cost of growing barley. EAM has since increased barley purchase prices and there are indications that the company may increase the current transport subsidy of 50 per cent.

Mr Kalii said unpredictable weather patterns recorded in the barley growing region of the Rift Valley over the past 10 years had prompted the EAM management to think about crop insurance as part of the solution.

John Gangla, an assistant service manager with Aon Minet’s Industry and Mining Division — the brokers of the crop insurance policy — said recent studies had revealed that the barley growing region was ripe for such a cover to cushion farmers from losses brought about by natural elements.

The policy covers barley farmers against losses that may arise from fire outbreaks, hailstones, drought, excessive rain, pest and disease and wind.

The crop cover is provided by a consortium of four insurance companies including Insurance Company of East Africa, Heritage Insurance, Lion of Kenya and UAP with Suisse Re is the re-insurer. According to the arrangement, banks linked to the insurance companies in the consortium pay the premium of 3.5 per cent of the sum assured on behalf of the farmer and recover the money from produce sales.

Gangla said the concept of crops insurance was fast gaining popularity among cash crop farmers in Kenya. UAP Insurance broke new ground last year when it took crop insurance out of its traditional flower industry market with a cover for Dominion’s rice farm in Nyanza Province.

“In our case, a farmer doesn’t have to sell his assets to finance this insurance cover,” said Mr Kalii.

Unlike general and life insurance products that are aggressively marketed by insurance firms, Kalii said information about crop insurance is scanty among farmers who are the potential buyers of the policy. He said his company is talking to the government for a partnership that will enable it use the Ministry of Agriculture’s extensive network to pass on the information.

Tejpal Honjan, a barley farmer who lost his entire crop to bad weather last December said he had decided to take the policy because it offers him the possibility of salvaging part of his investment in case a calamity strikes. The cover, he said, would fill the gap that was left after the Guaranteed Minimum Return (GMR) scheme to farmers was withdrawn.

Government paid farmers the GMR through the company in case of crop losses to factors beyond farmers’ control. Unlike crop insurance, cover where farmers face deduction for premium cost, GMR was free and government sponsored.

Farmers also lamented that EAML’s Advisory Services Officers are too few to handle all the 400 contracted barley farmers.

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