Ghana will again celebrate her professionals who put food on our tables come Friday November 4, 2016 at Kintampo in the Brong Ahafo Region under the theme ‘Agriculture: A Business Response To Economic Growth’.
This is the region described as the ‘food basket of Ghana’ and its choice couldn’t have been more strategic! Indeed this accolade can only remain relevant if food cultivation is made possible through reliable rainfall patterns.
The erratic weather conditions, however, make it difficult for enough produce from the Region and other parts of the country. Over-reliance on God for the rains is a major factor affecting our Agricultural sector.
Indeed most of us in urban and peri-urban areas do not feel bothered with the source of food so long as it is healthy and we can afford.
There is, however, the need to worry our heads over especially the weather change and its effect on the farmer and what we can do to mitigate the effects on the sector.
How the farmer is able to finance crop cultivation, animal rearing and ultimately how they pay back their agric loans in the face of recurring climate change should be at the fore of our thoughts.
Agriculture as the mainstay of our economy
It is needless to say agriculture remains the mainstay of many economies, including Ghana. Thus, the sector remains a dominant force in the country’s economic development, as it employs over 50 per cent of the population.
Sadly its contribution to the country’s Gross Domestic Product (GDP) has dwindled to 19 per cent in 2015 against 21.5 per cent in 2014.
The many challenges the sector is fraught with such as unreliable rainfall patterns, poor climatic conditions, continuous reliance on outmoded technologies, and poor storage and processing infrastructure amongst others have become a source of worry to the farmers themselves and policy-makers by extension.
This therefore endangers the source of livelihood of both large scale commercial farmers and small scale peasant farmers in particular, as they tend to record poor yields and often unable to repay contracted loans.
Indeed, there have been reports of some farmers even committing suicide, as a result of some of these challenges. In recognition of the enormity of these challenges therefore, the Ghana Insurers Association (GIA) established the Ghana Agricultural Insurance Pool (GAIP) to address the myriad of issues threatening the Agric sector, but the sustainability of this project still requires a sustained effort on the part of not only farmers, but policymakers as well.
The IIPACC Project
In order to mitigate the risks associated with the Agric sector, the German Development Co-operation (GIZ) in concert with other relevant stakeholders, established a project dubbed “Innovative Insurance Products for the Adaptation to Climate Change” (IIPACC).
The project, which started in December 2009, sought to facilitate the development and introduction of agricultural insurance for farmers in the form of an innovative, demand-oriented and economically-sustainable agricultural insurance product.
It is expected to also facilitate the development of other innovative agricultural risk mitigation products, particularly, through investments in meteorological infrastructure to improve data collection and analysis, under the joint supervision of the National Insurance Commission (NIC) and the GIZ- IIPACC, in collaboration with the GIA.
As a risk mitigation project, the project is targeted at farmers, agro-processors, rural and financial institutions and input dealers, among others, so that, compensation is paid them in the event of crop failure due to extreme weather conditions like drought, excess rainfall and floods.
Establishment of the Drought Index Insurance Product
Similar to the IIPACC Project, the GAIP also introduced the Crop Drought Index Insurance (CDII), as a risk-mitigating mechanism, which works on the basis of rainfall measured at weather stations operated by the Ghana Meteorological Agency (GMet).
Thus, it provides protection to beneficiaries against the negative effects of extreme weather events; thereby helping farmers and their financiers to manage drought risks. It also provides a comprehensive insurance cover for all the growth stages of crops such as maize, which is a major staple in Ghana.
With a focus on the local farmer, the product employs simple language terminologies to interfacing with beneficiaries in order to ensure message clarity and thus, avoid ambiguities with claims expectations.
The development of the Drought Index Insurance Product was a result of concerted efforts by stakeholders like the GIZ, NIC, GIA, Ministry of Finance, Ministry of Food and Agriculture (MOFA) and the GMeT with support from Swiss Re, a reputable international reinsurance company.
What stakeholders stand to gain from GAIP
The current membership of the GAIP comprising 19 non-life insurance companies in Ghana and operating under the guidance of the GIA remains unchanged.
While making access to loans from the banks a lot easier for farmers, the pool also ensures that crop revenue, particularly during adverse weather, is not lost and thus, the farmer will remain in business in spite of the disaster.
Claims Paid Under the GAIP
It is also worthy to note that as of October 2012, about 140 farmers mainly in the Northern and Upper Regions of Ghana were the first to receive claims under the Drought Index Insurance Product, offered by the GAIP.
The farmers received compensation for losses due to inadequate rainfall within their areas. For instance, farmers around Pong Tamale did not have adequate rainfall during the growth stage of their maize.
The weather station, thus, measured 17 consecutive dry days during which the farmers hardly received any rainfall, which consequently affected the maize harvest.
Unlike conventional crop insurance that requires many physical inspections and risk assessments of every individual farmer’s field, the Drought Index Insurance uses rainfall measured at a weather station as a proxy for determining the basis for claims.
Instructively, the GAIP kept faith with its obligation to the farmers by paying their claims promptly in order to demonstrate to all stakeholders about GAIP preparedness to be a trustworthy partner in the agric sector.
The Way Forward
It is my expectation the theme of this year’s Farmers’ Day celebration – ‘Agriculture: A Business Response To Economic Growth’ should focus on addressing alternatives such as irrigation projects. This will reduce our continuous reliance on the rains which is largely affecting the Agriculture Insurance initiative.
While calling on MOFA to take drastic measures to address unreliable rain patterns to that of irrigation, may I encourage creditors to support this worthy cause.
They must, however, not relent on effective appraisal and risk assessment procedures before advancing credit facilities to farmers. Farmers, on the other hand, must also ensure strict compliance with best farming practices as they fully embrace the good intentions behind the establishment of GAIP.
Most farmers, while appreciating the CDII model, appear unable to afford the premiums charged.
At inception, the project registered over 3000 farmers who paid their initial premiums, but these numbers have since dropped to less than 300, owing to their inability to sustain the payment of premiums.
In 2015, for instance, total claims paid under the scheme is about GH¢159,740 against premium of GH¢553,000. In this regard, the Government of Ghana, through MOFA, should consider the advocacy of the NIC by introducing subsidies on Agricultural Insurance (appropriated in the annual budget) in order to encourage farmer participation, as it pertains in Nigeria.
Author: MAWULI ZOGBENU
Article originally appeared in the Graphic Business Newspaper
