UAP joins Equity to launch livestock insurance scheme

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.

The farmers are also targeted for coverage by a Sh400 million fodder improvement programme launched in late 2009 by the Food and Agriculture Organisation (FAO) to help improve their terms of trade in that the effects of the ravaging drought saw most pastoralist communities moving to sell off their livestock at throw away prices in order to source for key food items including sorghum and maize.

The Livestock ministry wants Sh700 million in addition to the Sh130 million earmarked for the exercise, permanent secretary Kenneth Lusaka said recently, adding that they had prepared a Cabinet memo requesting for the money.“The memo is ready and we shall present it so those who lost their herds can find a new source of livelihood,” he said a fortnight ago.

Thorough vetting

The government, however, insisted that farmers would be subject to thorough vetting procedures to avoid abuse of the exercise that comes only months after the government used Sh200 million to purchase livestock ravaged by the drought. “The reviews will be thorough so that those who were handed money to re-stock must show proof of their action. We hope the money wasn’t wasted on other things yet livestock remains the main source of livelihood for many,” Mr Lusaka said.

In an humanitarian gesture at the peak of the drought, the government offered to buy weakened animals from farmers for slaughter at the Athi-River-based Kenya Meat Commission (KMC) plant to help cushion them from the excesses of unfavourable weather.