Zimbabwe is entering its newest farming season, but the uptake of agricultural insurance remains very low.
Interestingly, given that the country is still largely agro-based, farmers are not taking the requisite measures to protect their crops.
Agriculture contributes around 17 percent to Zimbabwe’s gross domestic product (GDP) and about 60 percent of raw materials to the manufacturing industry.
Insurance Council of Zimbabwe (ICZ) executive officer Tendai Karonga, said although there has been small increases in hail insurance for the tobacco crop by the smaller farmers, uptake is largely dominated by the bigger commercial farmers.
“Despite the agricultural sector being one of the major drivers of the economy, its consumption of insurance service is very minimal contributing 1,45 percent to the gross written premium (GPW) for the period January to June 2020, which is an increase of 370 percent in real growth compared to the same period in 2019. 290 percent of the growth is attributed to hail insurance for the tobacco crop,” he said.
“Main consumers of agricultural insurance are commercial and contract farmers.”
Agricultural insurance can provide value to low-income farmers through protecting farmers when shocks occur and encouraging greater investment.
Experts in the field say there are a number of reasons why agricultural insurance remains unpopular in this country.
Some of these stated reasons include: Lack of insurance products that address the needs of smallholder and subsistence farmers who are the majority in Zimbabwe following the land redistribution exercise; general mistrust in insurance services, and reliance on traditional self-insurance in risk and loss management.
Then there is also the issue of thin profit margins in the sector particularly for small scale commercial and subsistence farmers, and the lack of knowledge on the benefits of insurance and risk management services.
Mr Karonga has emphasised the need for insurance companies to come up with products with the agricultural insurance segment that cater to the needs of the recently emergent indigenous farmers.
“Insurers are being encouraged to offer community-based agricultural insurances for the subsistence and small-scale farmers taking advantage of economies of scale concept,” he said.
According to figures from Zimbabwe Small Holder Organic Farmers Forum (ZIMSOFF), smallholder farmers in the country are the highest producers of diverse food crops, with estimated supply over 80 percent of agricultural produce consumed in Zimbabwe.