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By Steve Umidha @steveumidha
Increased returns from dairy farming are driving the uptake of livestock insurance industry as farmers move to protect their enterprises.
The Association of Kenya Insurers (AKI) says the appetite for livestock insurance among farmers is now beginning to show signs of growth mainly in the central part of the country where dairy farming is commonly practiced.
The availability of financial institutions in these regions according to AKI is further poised to grow the sector as more farmers are today exposed to insurance services to secure investments which had previously prevented most of them from taking up loans to boost
their yields and to expand their businesses.
Available figures from the association show that livestock insurance had increased by 16 per cent last year compared to 13 percent the sector registered a year earlier, a growth of just three per cent. Further figures by AKI indicate that the uptakes of livestock insurance boosted agricultural insurance products that are usually are dominated by wheat, maize and barley mainly taken by company-contracted farmers.
Government and local banks have largely contributed to the growth of the sector including wheat, barley, flower and horticultural farming which are capital intensive.
Agriculture insurance attracted gross written premiums of Sh3.2billion accounting for 21.5 per cent of insurance business in 2014 while insurance companies earned premiums of Sh1.47billion out of which Sh490million was paid out to farmers as compensation for losses suffered according to the AKI’s annual report.
“Any livestock farmer taking up insurance knows animal husbandry remains a core condition for qualifying for the insurance cover. They know one must also keep a veterinary officer close at hand at all times and this has contributed to increased incomes from sale of milk to processors,” commented CIC Group General Manager Joseph Kamiri in an exclusive interview, urging co-operative societies empower farmers to intensify their dairy investments by securing them through the take up of insurance policies.
“Access to the dairy market, especially in the big cities enabled the dairy sector to go full commercial where small parcels of land were utilized to the optimum for dairy farming. The returns are good and farmers are now able to finance all their projects using funds earned from the sale of milk. This value of investment can only be safeguarded by taking insurance for your cow,” he added.
Insurance firms such as APA insurance, Takaful Insurance, CIC insurance among other continue to lead the front in coming up with packages suitable to farmers for compensation during famine or drought.
Last year APA insurance launched a Sh1.5billion insurance package to compensate pastoralists where livestock is lost during drought, while Takaful Insurance has a scheme based on Sharia’h law operating in a similar model.