International Food Policy Research Institute (Ifpri) says African countries including Malawi require innovative crop insurance products to ensure that smallholder farmers manage climate risks.
In its analysis titled ‘Scaling up crop insurance in Africa for climate resilience and agricultural transformation’, the think-tank said crop insurance can increase farmers’ investment in high-return activities by 30 percent and reduce extreme weather effects.
Produced by Ruth Hill and Berber Kramer, the report, however, noted that although insurance has evolved to become more affordable, further innovation is needed to ensure high-quality products that cover farmers’ needs.
Reads part of the report: “Championing insurance solutions that are technologically advanced, integrated with social protection, and supported by evidence-based subsidy models can help to transform African agriculture.
“These measures will not only protect smallholder farmers from immediate climate shocks but also unlock the investment necessary for long-term agricultural resilience and food security across the continent.”
For instance, according to the report, 37 percent of African population is at risk and countries must strive for better insurance product design, farmer education, and links to credit and inputs and in some cases smart subsidies.
On the results of the effective implementation of crop insurance, Ifpri said various studies confirm that convinced farmers become optimistic of investing in high-return activities like fertilisers and area of production as they feel secured.
“Ten evaluations of various insurance products across contexts, show that when farmers are confident in the security provided by their insurance coverage, they increase investments in higher-return activities by 15 percent to 30 percent.
“This investment gain is substantial, considering higher investment is the secondary benefit of insurance after protection in crises,” reads the report.
Malawi has in the past few years been insuring crops from drought and El Nino weather where government receives payouts to cushion farmers’ yields impact but agricultural experts described crop insurance in Malawi as minimal in general.
In an interview, agriculture policy expert Tamani Nkhono-Mvula said, in general, crop insurance is not common in Malawi because most of those involved are smallholder farmers who do not have individual capacity to pay and they don’t appreciate it.
Nkhono-Mvula said: “Crop insurance doesn’t make sense to them unless it’s a government policy to pay on their behalf.”
In a separate interview, agriculture expert Iman Lufuwu observed that with climate change effects becoming inevitable, crop insurance is an ideal arrangement but highlighted the need for clear guidelines between farmers and insurance players to ensure a win-win situation.
“Most insurance companies are friendly when paying premiums but when it comes to eventualities of crop failure due to drought or floods.
“There must be more sensitisation to both insurance companies and those farmers will to insure there crops. With rainfed agriculture compounded by drought or floods is risk to the insurance company in terms of business.”
In 2024/25 growing season, the African Risc Capacity made a $3.3 million (K6 billion) insurance payout to Malawi Government in respect to drought-related agricultural losses.
The payout was lower than $11.2 million (about K19.6 billion) that the country received in 2023/24 to cushion the impact of El Nino weather, but government still said it will bridge the financing gap to help 5.7 million people that were at risk of hunger then.
The premium for the traditional insurance policy was supported by the African Development Bank, while the German Government through KfW supported the premium for the anticipatory insurance policy.
