1. Smallholder Farmers Perspective on Agriculture Insurance in Malawi by Dyborn Chibonga, NASFAM CEO
Presentation at Africa-Asia Conclave on Loss and Damage due to Climate Change to be held in Nairobi, Kenya from August , 2016

2. Outline of presentation
About Malawi
About NASFAM
Agriculture Insurances in Malawi
How does unfavourable Weather impact on farming business
How do small farmers cope with bad weather for production
Challenges in Implementing Agriculture Insurance Schemes in Malawi
Ensuring an Effective Agriculture Insurance programme
Page 2

3. Quick Facts About Malawi
Population: about 16 million
Population growth: 2.8%Urbanization: 14%
Per capita GDP: $834
Population living in poverty: 52%
Access to improved water: 66%
Adult Literacy: 64%
Agricultural sector provides:
85% of the labour force
35% of GDP
90% of foreign export earnings
65% of raw materials for industry
Page 3

4. About NASFAM
SHF Owned Organisation – 165,000 SHF members in 52 Associations operating in 19 Districts
Exists to improve SHF livelihoods / incomes and lives through:
promoting farming as a business
enabling them to work through Associations
linking Associations with NASCOMEX Ltd for value addition
providing extension and livelihoods support.
Page 4

5. Agricultural Insurance in Malawi
The main operating agricultural insurance in Malawi is the Weather Risk Insurance (WRI)
The Weather Risk Insurance is an approach that attempts to ensure that farmers are mitigated against the effects of drought or/and floods
2014/2015 Season – 1. 6 million vulnerable people
2015/2016 Season – 6.8 million vulnerable people
Page 5

6. Weather Risk Insurance targeting
Major Weather Risks:
1. Moisture stress under drought conditions
Highly sensitive crops: maize, groundnuts, paprika and Soya
Moderate to low sensitivity
Tobacco, cotton, sorghum, chillies
2. Excessive moisture under flooding conditions
All crops
Page 6

7. How unfavourable weather impacts on farming business
Reduced profitability of land due to:
Land degradation (poor soils, siltation, flooding etc) due to run-off
Loss of biodiversity as farmers resort to earning a living through using/destroying the environment
Dry spells and drought
Food insecurity and malnutrition
Little or no food at household level
Poor quality food for the farmers
Reduced farmer incomes due to:
Reduced yield and quality impact
Negative returns on investment (e.g. fertilizers)
Reduced credit worthiness
Withdrawal of credit facilities
Erosion of household assets
Page 7

8. How do smallholder farmers cope with extreme weather?
Climate Smart Agriculture (CSA):
Agricultural diversification (crops and livestock)
Irrigation/ winter cropping
Conservation Agriculture (CA)
Agroforestry
Afforestation
Soil Health improvement programmes
Weather Risk Insurance
Off Farm activities
Page 8

9. Challenges in implementing Agriculture Insurance programmes in Malawi
Lack/inadequate instruments to measure or forecast weather
High interest rates and limited availability for agricultural loans (+40%pa)
Small land holding sizes and lack of Secure Land Tenure leading to high transactional costs
Lack of collateral for production credit
Inadequate organized marketing systems that would enable loan recovery in a systematic process, e.g. at point of sale
Lack of both agriculture and climate change policies
Page 9

10. Ensuring an effective Agriculture Insurance programme to build resilience in Malawi
Need for partnership with institutions providing the key services such as
Farmer mobilisation, organisation and production extension
Provision of credit and insurance
Provision of marketing services.
Crop selection
The returns must be adequate to cover the cost of the input loan and the insurance premium.
Building knowledge of participating farmers.
They must be knowledgeable before they participate
Participating farmers should be in groups for collective action
Page 10

11. Ensuring an effective Agriculture Insurance programme to build resilience in Malawi
Screening credit-worthiness of application (initial deposits).
Need for a Regulatory framework as the programme grows.
In the interim, a Code of Conduct alongside a Product Manual should be developed.
Reduced interest rates will be an incentive for those taking insurance cover, and should offset the cost of the premiums.
Page 11

12. “The future belongs to the organized!”
Thank You!
Page 12