Farmers to access crop insurance via mobile phones

The project was first tested in 2009 in Laikipia district, where 200 farmers purchased insurance for seeds and herbicides, and, after the drought, received compensation for 80 per cent of their investment.

The Syngenta Foundation, one of the project supporters and UAP Insurance said about 10,000 farmers will be using the service by the end of this year.

The plan is to then expand into all key farming areas of the country by 2012, with the target of offering the insurance to about 50,000 Kenyan farmers.

Crop insurance is considered essential to agriculture in developed countries but has been largely unavailable to farmers in low-income countries, in part because of the costs of administering “micro” policies.

Conventional crop insurance requires field inspections at the time the policy is issued, and follow-up visits to confirm damage.

Such procedures can be cost-effective for large farms, but are far too expensive to be practical in places like Kenya, where most farming is done on small plots in rural areas.

The administration cost of the insurance is reduced by using the Safaricom data network to record policies and transfer funds, both the premiums to UAP and the payouts to farmers.

The cost of each transaction is minimal — far less than the price of a SMS message.