Do farmers really favour mandatory crop insurance?

Published by:
Focus Region:
Sub-Saharan Africa
Focus Topic:
Rural Finance / Insurance

The workshop discusses farmer feedback and insurance lessons from IFAD-funded Kenya Cereal Enhancement Programme.


Following several seasons as early adopters of crop insurance, many smallholder farmers in Kenya have told researchers that they prefer insurance to be mandatory, and bundled with other agricultural inputs that they can buy on credit with tapering subsidies.

This was a surprise result for market analysts who say clients rarely favour mandatory insurance. About 40 per cent of farmers interviewed expressed this preference for a packaged insurance product, with another 52 per cent preferring flexibility.

The farmers’ feedback was one of many points under discussion during a workshop held in Naivasha, Kenya on 10 May 2023.

Participants from the public and private sectors gathered together to discuss progress made and challenges faced by different partners working to integrate agricultural and climate risk insurance within the Kenya Cereal Enhancement Programme – Climate Resilient Agricultural Livelihoods Window (KCEP-CRAL). The programme is implemented by the Government of Kenya and co-funded by the International Fund for Agricultural Development (IFAD), the European Union and other partners.

The workshop was held by IFAD’s technical assistance INSURED programme (Insurance for Rural Resilience and Economic Development) and Nairobi-based insurtech Pula. The company was contracted by INSURED to design and run the insurance scheme for KCEP-CRAL farmers in targeted Arid and Semi-Arid Lands. INSURED is implemented through PARM (the Platform for Agricultural Risk Management) and funded by Sida (Swedish International Development Cooperation Agency).


A deeper dive on the research

The farmers had been interviewed as part of focus group discussions, and had experienced both mandatory and non-mandatory insurance over various growing seasons. Voluntary insurance was introduced by the programme based on farmer feedback during the mid-term review in 2021 to give producers freedom of choice.

It was noted that farmers in areas where insurance payouts had recently been high were particularly likely to favour mandatory insurance, while those in low-payout areas preferred voluntary solutions. One reason given by those expressing a preference for mandatory insurance was that this spares them having to decide every season whether to buy insurance or not.

The research in Kenya also showed how payouts make a difference to farming households. Farmers who received a payout following a crop loss event were:

  • Less afraid to take loans
  • Less likely to sell livestock
  • More likely to increase their investment in the next season.


Payouts also help with debt repayments, and diversify sources of income.


How to improve value for farmers

A brief summarizing lessons learned was distributed at the workshop and participants discussed results from the perspectives of all the stakeholders involved in designing, distributing and administering the insurance. Farmers’ representatives also took part.

The wealth of information gathered will be used to improve the insurance product – so that it provides greater value to producers – and drive take-up going forward.

Insurance can play an effective role in building farmers’ resilience and their capacity to adapt to climate change. To strengthen livelihoods, manage risks and boost productivity, insurance is best used in combination with other techniques and approaches – including improved inputs, access to credit, better post-harvest storage facilities and stronger links to markets.


The role of KCEP-CRAL

KCEP-CRAL is an innovative US$123 million programme implemented by the Government of Kenya. Using e-vouchers, it provides subsidized inputs to small-scale producers practicing rainfed agriculture in arid and semi-arid parts of the country.

The e-vouchers are used to buy inputs such as seed and fertilizer, conservation agriculture services, post-harvest management equipment, with tapering subsidies. The farmers grow maize, sorghum and associated legumes, including beans, green grams and cow peas. Crop insurance is administered using the e-voucher platform. Drought is the major cause of crop loss.

Since 2020, farmers taking part in KCEP-CRAL have been offered an area yield index insurance product that is especially tailored to their needs. To date, more than 100,000 small-scale producers enrolled in KCEP-CRAL have bought insurance protection, and about 60 per cent of these early adopters have been women. A substantial 48 per cent of the insured farmers have received a payout.

KCEP-CRAL was launched in 2016 and is co-funded by IFAD, IFAD’s climate adaptation programme ASAP (Adaptation for Smallholder Farmers), the European Union, and domestic contributions involving Government of Kenya, farmers and participating financial institutions (Co-operative Bank of Kenya and Equity Bank Kenya Limited). KCEP-CRAL is also supported by a Rome-Based Agency collaboration involving IFAD, the Food and Agriculture Organization (FAO) and the World Food Programme (WFP). A consortium of insurers headed by APA Insurance underwrites the insurance product.

Other key takeaways from the research discussed at the workshop included farmers’ interest in being better informed about how insurance works, and their clear preference for payouts to be processed more quickly. Payouts are made directly to farmers’ e-voucher accounts so they can be spent on items including next season’s inputs. Four out of five farmers said that they would recommend insurance to their family and friends.


Read more

Promises kept: crop insurance makes a difference for Kenya’s small-scale farmers

Kenya Cereal Enhancement Programme Climate Resilient Agricultural Livelihoods Window


© IFAD, KCEP-CRAL farmer Veronica Mutavi harvesting maize on her farm in Machakos county,