Weather-index insurance helps some drought stricken farmers in Kenya

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Some farmers in a drought stricken region of Kenya have received payments under the terms of a weather-index based microinsurance policy established this year. Wheat farmers in Narok County in southwest Kenya have received payments for a total crop failure due to drought in April.

In total 3,380 farmers will receive compensation for the loss of their crops totalling some $1.77m. The amount of payment made is based on actual weather conditions measured against an index with payment decided upon depending on deviation of weather conditions from average norms (in most cases). In this particular case the drought conditions triggered a payment of $112 per acre on wheat crops of covered farmers.

Weather-index microinsurance schemes are making a measurable impact in some developing countries where their payouts enable farmers to recover from what would otherwise be financial disaster. The transfer of weather risk away from these poor farmers to the international insurance markets strengthens the resilience of farmers and agricultural businesses to weather impacts.

The next challenge for these microinsurance schemes is to build penetration as to date they are mostly run as small pilot type schemes.

More details on this in Coastweek Kenya.

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