SAIA

South African Insurance Association

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Update on Agriculture Insurance

The complexity of commercial farming is often not well understood, including by those involved as stakeholders in the wider agricultural industry.

It is for this reason that SAIA sponsored an event for delegates attending a workshop of the World Bank Group’s Global Index Insurance Facility (GIIF) to a commercial farm near Delmas, in the Mpumalanga Province. At the farm, known as “Buiteplaas”, delegates were afforded the opportunity to harvest fresh peas and taught how complex and precise the harvesting process is. The farm owner and various farm managers also provided the delegates with insight on the intricacies of agricultural management including the importance of soil analysis, preparation and control.

These delegates from all over Africa, including South Africa, attended a technical workshop, held in Johannesburg on 13 – 14 October 2016 on operationalising agriculture index insurance. The training provided participants with an overview of index insurance concepts and products. It also provided an opportunity to learn more about contact design, emerging regulatory issues, pricing and reinsurance, distribution options, educational requirements, as well as other innovations in the field of index insurance.

Index-based insurance products for agriculture represent an attractive approach for managing weather risk, especially for developing farmers. Programmes conducted in several developing countries have proven the feasibility and affordability of such products. Weather impacts all aspects of the agricultural supply chain, particularly in economies based on rain-fed agriculture. Even with the introduction of new crop varieties, production technology and new management practices that offer the potential to increase yields and improve resistance to weather perils, the majority of agriculture in most developing countries remains highly susceptible to extreme, uncontrollable weather events that can severely impact both quality and yield of a crop.

Such events in a South African context include insufficient rainfall and extreme temperatures. The effects of weather risk are felt most acutely by vulnerable agricultural households including developing farmers and also by many commercial farming ventures.

SAIA remains committed to the development of insurance solutions and mechanisms that are sustainable for the short-term insurance industry, and affordable and valuable to commercial farmers, especially multi-peril crop insurance and developing (smallholder) farmers. This will contribute considerably to national food stability, financial inclusion and economic transformation, including job creation.

For more information contact Nico Esterhuizen at Nico@saia.co.za 

Below are images of the day on Buiteplaas