Amer­i­can farm­ers are rel­a­tively well pro­tected if their crops fail as many have insur­ance. But in the under devel­oped world such insur­ance is non-existent, instead when crops fail peo­ple starve unless aid is brought in.

Today’s Boston Globe pro­files a new insur­ance pro­gram that is being started in Ethiopia by Oxfam Amer­ica. Writer James F. Smith explains how the new insur­ance pro­gram works.

Vil­lagers have flocked to sign up for the trial farm insur­ance pro­gram since it was launched early this year. Funded by the Rock­e­feller Foun­da­tion and Swiss Re, one of the world’s largest insur­ance com­pa­nies, Oxfam Amer­ica has made drought insur­ance avail­able for the first time to about 200 house­holds, 38 per­cent of them headed by women.

The suc­cess of the pilot ini­tia­tive prompted Oxfam Amer­ica and Swiss Re to com­mit last month to sharply expand the project, from just one vil­lage to five more, with a new Rock­e­feller grant of $565,000.
…

Mar­jorie Vic­tor, who heads the pro­gram in the Boston Oxfam office, said two-thirds of the vil­lagers opted to work for sev­eral days for the local drought-relief agency to pay for their poli­cies; the rest paid cash. The farm­ers could pick a range of cov­er­age, from just the cost of seeds and other inputs to com­pre­hen­sive cov­er­age of the value of the har­vest. Most chose basic cov­er­age for this sea­son, which ends late this month.

In all, 200 farm­ers bought poli­cies val­ued at a total of $2,500.

Oxfam Amer­ica worked with a local firm, Nyala Insur­ance Co., to pro­vide the poli­cies, and Swiss Re then pro­vided rein­sur­ance. Because it would be too costly to try to mea­sure each farmer’s actual losses, this is not crop insur­ance but weather-index insur­ance: If rain­fall is below cer­tain pre­de­ter­mined lev­els, then pay­ments will be due to farmers.

Oxfam America’s pres­i­dent, Ray­mond C. Offen­heiser, said the pro­gram can help achieve house­hold food secu­rity in one of the poor­est cor­ners of the earth, with the poten­tial to be applied far beyond Ethiopia’s bor­ders. Swiss Re pio­neered the weather risk insur­ance for poor coun­tries, start­ing in India in 2004. The com­pany says the pro­gram there now cov­ers 350,000 farmers.

But nowhere are con­di­tions as dif­fi­cult as in the arid Horn of Africa.
…

The gov­ern­ment and for­eign aid groups have forged a food safety net for nearly eight mil­lion chron­i­cally hun­gry peo­ple. But the lack of rains this year have pushed another 6.2 mil­lion into the ranks of those offi­cially in need of food aid in a coun­try of 77 million.

Like

Unlike