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Farmers To Enjoy Insurance Protection
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Climate change is currently widely accepted as a reality, and adaptation to it is one of the biggest challenges facing the vast majority of the people in the developing world particularly countries in sub-Saharan Africa.

Its effects higher temperatures, increased frequency and intensity of droughts and floods, as well as other weather-related perils pose risks for the very poor and vulnerable whose source of livelihood depends mainly on subsistence agriculture.

Research has shown that by 2100, mean daily temperatures in Ghana will rise by three degrees Celsius and rainfall frequency will decline by between 9% and 27% -- with increasing seasonal and spatial variations.

Against this background, a German International Cooperation (GIZ)-supported project - “Innovative Insurance Products for Adaptation to Climate Change” (IIPACC) - has been initiated to support the country in tackling the socio-economic costs and risks associated with climate change.

The aim of the project is to facilitate the development and introduction of agricultural insurance solutions for farmers. These are in the form of innovative, demand-oriented agricultural insurance products and are intended to protect farmers, agro-processors, rural and financial institutions, input dealers among others, in the event of crop-failure due to extreme weather events such as drought, excessive rainfall and flood.

The project is jointly implemented by the National Insurance Commission (NIC) and GIZ-IIPACC in collaboration with the Ghana Insurers Association (GIZ), and is funded by the German Federal Ministry of the Environment, Nature Conservation and Nuclear Safety.

The project was initiated in December 2009 and will run until June 2013. In line with objectives of the project, NIC and GIZ commissioned a feasibility study in March last year to assess the potential to implement a sustainable agricultural insurance system in Ghana.

The feasibility study looked into commercial viability by quantifying the demand for crop insurance by farmers, financial institutions and input suppliers. It also sought to confirm the interest of the insurance industry to develop and offer suitable agricultural insurance products.

The study also identified the potential to develop several agricultural insurance products - for example, conventional indemnity-based (for rubber, banana, plantain and mango; aggregate excess of loss of trees for cocoa, etc) and innovative index-based (weather-index for groundnut, maize, millet, rice and sorghum; and area yield for groundnut, maize, millet and sorghum) products.

As a result of the IIPACC initiative, the Ghana Agricultural Insurance Programme (GAIP) has now been formed, and it represents a structured and systematic approach to issues relating to agricultural insurance in the country.

It serves as a broad stakeholder platform aimed at spearheading and promoting the development and introduction of agricultural insurance solutions for farmers.

The highest decision-making body of GAIP is the Steering Committee, which is constituted of representatives from 11 private and public institutions.

These include the National Insurance Commission (NIC), Ghana Insurers Association (GIA), German Development Cooperation (GIZ), Ministry of Finance and Economic Planning (MOFEP), Agricultural Development Bank (ADB), Stanbic Bank Ghana Limited, Ghana Meteorological Agency (GMet), Ghana Reinsurance Company (Ghana Re), Ministry of Food and Agriculture (MOFA) and the World Bank.

The Steering Committee is chaired by the NIC with secretarial support from GIZ-IIPACC. The first Drought Index Insurance was rolled-out in the Northern, Upper East and Upper West Regions for maize during the crop season which started last month.

The main focus of the roll-out is bank portfolio protection (also known as the meso level approach), with the following institutions participating: Stanbic Bank, Agricultural Development Bank, Bangmarigu Community Bank and Bonzali Rural Bank.

Besides these banks, individual farmers associated with a research organisation operating in the Northern Region of Ghana, Innovations for Poverty Action (IPA), will be allowed to purchase crop insurance at the individual level. This approach has been adopted to also study farmers’ reaction to paying premiums from their own resources without subsidy or bank loan.

The results of this research will inform the method of scaling-up crop insurance for farmers this year.

Source: Ghana Agricultural Insurance Programme

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