UAP joins Equity to launch livestock insurance scheme
Posted Sunday, January 24 2010 at 16:04
Livestock farmers in northern Kenya, which is perennially hit by poor weather conditions, have received a boost following the launch of a satellite based insurance scheme to cover their herds against such risk.
Organisers of the Equity Bank and UAP Insurance-backed project hope to sign up about 1,000 households in Marsabit in the coming weeks. The project that uses satellite technology to gauge rainfall patterns is the first of its kind in Africa and if successful could be replicated in other parts of the continent where farmers faces such challenges regularly.
“If it’s successful we will look further afield, in western Africa around the Sahel and southern Asia,” project leader Andrew Mude of the International Livestock Research Institute (ILRI) told Reuters.
Under the pilot project, pastoralists in Marsabit will insure herds — of cows, goats, sheep or camels — against starvation during dry weather. Drought and lack of pasture are the main causes of livestock death in the arid region.
Under the project, pastoralists would get automatic payments for losses if satellite images of the region show impending drought.
The use of satellites bypasses the traditional, more costly system under which insurers check reported livestock deaths before making payouts. That is almost impossible to judge in herds that wander over huge areas.
Still, risks include that some herders suffer bigger than predicted losses during droughts. In other cases, some herders might get payments yet all their animals have survived.
Records showed that Northern Kenya has suffered 28 major droughts in the past century, with four of them in the past decade alone.
Estimates by the Livestock ministry further showed that about 6,700 households lost livestock worth Sh24 billion during the drought that ravaged the country last year alone.
Mr Mude said it was too early to say if the number of droughts was increasing, perhaps because of climate change stoked by human emissions of greenhouse gases.
Under the scheme, a family in Lower Marsabit would for instance have to pay Sh3,900 ($50) a year to insure a herd of 10 cows worth a total Sh120,000 ($1,580). Translates to a premium of Sh390 per animal in a cluster.
According to the deal the insurance pays nothing for herd losses of up to 15 per cent. So if drought strikes and is estimated as severe enough to kill 25 per cent of all livestock, the family gets a payout of Sh12,000, covering 10 per cent of the value of the herd.
In Mongolia, a different form of insurance brings payouts for all pastoralists if severe snowstorms kill animals in benchmark herds. But such data risks manipulation, ILRI said.
Herders signing up for the Kenyan insurance might also be likely to get other forms of credits — banks would be more willing to lend to those with more predictable incomes.
The satelitte-based insurance scheme is certain to provide a boost to farmers in the region who are also looking up to assistance from the Livestock ministry that is currently seeking additional funds from Treasury to help farmers replenish their herds.