New agricultural insurance compensates 1,600 farmers in southern Rwanda following drought

December 07, 2012

KIGALI, RWANDA (06 December 2012)--Over 1,600 farmers in the Huye district of southern Rwanda have received a payout from an innovative micro-insurance initiative called "Hinga Urishingiwe" or "Protected Farming" in Kinyarwanda. The money compensated the smallholders for decreased yields resulting from drought. One Acre Fund distributed the payout to bean farmers after the Ministry of Agriculture and Animal Resources (MINAGRI) confirmed the local loss in yields.

"For the first time in Rwanda, smallholder farmers have been compensated for their losses following drought. We at the Ministry look forward to seeing the continued results of the insurance program. I believe the payout is evidence that the program can bring a stability to smallholder farming that previously did not exist," said Dr. Agnes Kalibata, Minister of Agriculture and Animal Resources.

The program offers farmers insurance bundled with loans provided by One Acre Fund for fertilizer and other inputs. A total of 13,000 Rwandan farmers had their loans insured during the second season of 2012 on the basis of an area yield index. After drought cut farmers' bean yields by nearly 50%, One Acre Fund distributed the payout to farmers as general reduction of their debt. Farmers who had already fully repaid their loans received cash. Depending on the loan repayment outstanding, 800 farmers received a payout, or a combination of debt forgiveness and a payout together. The other 800 received just debt forgiveness. On average farmers received the equivalent of 3.76 USD.

The payouts were triggered when the statistics department of MINAGRI verified a fall in bean yields, and funds were disbursed by local Rwandan insurer SORAS. Benjamin Mbundi, CEO of SORAS said, "SORAS is proud to contribute to the development of our country and we believe insurance can give farmers the comfort to grow."

Eric Pohlman, Country Director of One Acre Fund Rwanda - Tubura said, "We're thrilled that our innovative insurance program was able to help over 1,600 households in Huye during the 2012 drought. The farmer payout this month is a great short-term victory. The long-term win will come in future seasons as farmers with drought protection demonstrate more confidence and make larger investments in agriculture."

Marco Ferroni, Executive Director of the Syngenta Foundation for Sustainable Agriculture, emphasizes the importance of those investments. "Smallholders' yields in Rwanda, as elsewhere, lag seriously behind their potential. By shifting the burden of risk from farmers' shoulders, insurance enables them to afford yield-raising inputs, year after year."

The insurance program, launched in Rwanda earlier in 2012, offers smallholder maize and bean growers protection for their loans for high-yielding seeds, fertilizers, and other farm inputs. The use of yield and weather indices to calculate harvest damage keeps administration costs low. This enables smallholders with as little as a tenth of a hectare to afford the insurance. The initiative is a partnership between MINAGRI, One Acre Fund, the Syngenta Foundation for Sustainable Agriculture, SORAS Insurance in Rwanda, and Swiss Re Corporate Solutions.

Bernardine, a beneficiary farmer whose debt was reduced, described how she feels with insurance, "I am really proud of my insurance! I was not expecting to have my debt reduced like it is now. Farmers in my group are happy too. Those who were remaining with little money received payment from the insurance, which is a surprise for us. We are so thankful for this."

Syngenta Foundation for Sustainable Agriculture

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