Extreme weather events and climate change place Mozambique’s smallholder farmers at great risk. Devastation caused by floods, drought and cyclones – notably Cyclones Idai and Kenneth in 2019 – can instantly wipe out harvests and leave farmers without seed to re-sow their land and rebuild their livelihoods.
When natural disasters strike, smallholders require immediate assistance and a pathway to future resilience. That’s the aim of an innovative partnership launched in 2020 between USAID’s Feed the Future Partnering for Innovation and NCBA CLUSA. In collaboration with Phoenix Seeds (a Mozambican seed business) and Hollard Insurance, the partnership addresses both the immediate and long-term recovery needs of Mozambican farmers by connecting them – for the first time ever – with commercially available improved crop seed varieties, bundled with weather-based index insurance.
Nearly one year since its launch, the partnership is close to achieving its goal of selling 50 metric tons of insured seed to Mozambican smallholders. The success of these efforts is helping to lay the groundwork for the development of a viable, country-wide commercial market for weather-based index insurance and insured seeds.
HOW IT WORKS
Under the partnership, Mozambican farmers who purchase from Phoenix Seeds receive the improved crop seed, along with the reassurance that should a weather event occur, the growing season – and even the one after it – will not be a complete loss. This peace of mind can also bolster confidence to make additional investments in new productivity-enhancing technologies.
With a seed package in hand, farmers use SMS to register important details about their purchase, such as seed type, amount, date, location and a contact cell phone number. The location of the seed purchase is particularly important, as it provides a geo-reference, such as a GPS or proxy GPS address, which is linked to the insurance coverage. Remote satellite data for registered locations are collected regularly and used as the basis for triggering claims. If the collected data reveal levels falling outside the index’s maximum or minimum limits, a claim will be triggered and project partner, Hollard Insurance, will quantify the claim and pay Phoenix Seeds for the lost seed. Farmers will then be able to collect their replacement seed from the company at no additional cost.
REACHING LAST-MILE CUSTOMERS
Sales generated under the partnership to date reveal the potential for scaling-up crop seed bundled with weather-based index insurance for smallholder farmers throughout Mozambique. With reduced premium costs and the development of a more robust agribusiness environment through commercial out-grower schemes and agro-dealer networks, insuring a greater number of farmers over a larger geographic area becomes more technically feasible and spreads the risk for Hollard Insurance and other insurers across a larger base of the country.
Challenges remain, however, in achieving this partnership’s goals. As demand for the insured seed expands, it will be important to tap into more effective, cost-efficient ways to reach smallholders in the most remote areas of the country. Last-mile agricultural input shops are a key part of this effort. While their distance from urban centers make them difficult to supply, these shops often have the strongest input supplier relationships with smallholder farmers: they know their customers’ needs and preferences well and can wield significant influence when it comes to purchasing preferences, such as the long-term value of insured seed.
Through this partnership, Phoenix Seeds is currently exploring such opportunities with two fast-growing Mozambican private sector businesses and Partnering for Innovation partners: Casa do Agricultor, a distributor of vital agricultural inputs with an extensive national network of agricultural input shops and agro-dealers; and Adicional, a warehousing, logistics and transport company.
Smallholder farmers in last-mile markets stand to benefit the most from insured seed, especially in the face of severe loss following natural disasters. To help realize this, Partnering for Innovation and its partners in this effort are working to remove some of the risk inherent to agriculture and to shift perspectives to view smallholder farmers as a market opportunity, not a liability.
This article was originally published by Agrilinks here.