This archive report was first published on 9 May 2020.
Food security is a pressing issue in Kenya, where agriculture is the main source of income for many rural communities. To address this challenge, it is essential to support smallholder farmers, who are often constrained by limited access to capital, farm inputs, and other resources.
According to Ashok Shah, CEO of Apollo Group and director APA Insurance, 'Agricultural insurance has the potential to add immense value to the chain by facilitating access to means of production and changing behaviour by reducing uncertainty.'
Research has shown that insurance can spur the adoption of better farm management practices and new technology, contributing to reducing disease risks and boosting creditworthiness of farmers.
However, demand for agricultural insurance is still low in Kenya, due to factors such as limited consumer education, lack of trust in insurance providers, and overreliance on traditional coping mechanisms.
To overcome these challenges, it is essential to combine insurance with other services, such as loans, in-kind seed payouts, and government programmes that improve soil conditions and infrastructure.
By embedding insurance in a comprehensive value chain strategy, it will be more efficient and effective in supporting smallholder farmers and boosting food security.
Kenya has made significant progress in developing an agriculture insurance market, with the country's first index-based agriculture insurance pilot taking place in 2008.
However, more needs to be done to increase the adoption of agricultural insurance among smallholder farmers and to make it a sustainable and effective tool for food security.
