Farmers have argued that the current crop insurance policy which only covers investments such as for seeds and fertilisers, is not enough, calling for its review so that it also extends to expected farm output – based on the production trend of a given crop per hectare. Rwanda launched the National Agriculture Insurance Scheme in April 2019, a move that was considered by stakeholders as a milestone for the country’s agriculture sector as it aims to cushion farmers against losses stemming from disasters such as floods or drought. The scheme, which is subsidised at 40 per cent by the Government, is also intended to enable farmers to easily access funding from financial institutions and ensure the flow of credit to the agricultural sector. Unlike livestock insurance which covers the entire value of the cow and pays a farmer all the money their cow is worth in case of death from disease or unpredictable natural disasters, crop insurance covers the investment alone. In February 2020, the Senatorial Standing Committee on Economic Development and Finance expressed concern that insuring inputs alone was inadequate as that could not be enough to repay both the farmers’ bank loan and the accrued interest. Apollinaire Gahiza, a rice farmer, said that there was a need to have a crop insurance policy that has options to cover investments or the expected output. Citing rice which takes about six months to give yield, Gahiza said that if a farmer invests in rice plantation, but the crop is destroyed by floods just one month before harvesting, they will incur losses in case only investment is considered for insurance. “A farmer invests in order to get profit from their farm yield. When insurance covers investment alone, they are unable to generate income,” he said. “The insurance should have two options: One covering investments, the other covering the expected output so that the farmer can choose which one to opt for, depending on their financial means,” he said, indicating that normally, premiums are charged based on the requirements to purchase a given type of the insurance. Evariste Tugirinshuti, the president of the National Federation of Maize Farmers’ Cooperatives said that the insurance premiums that a farmer pays for crop investments were relatively affordable and help farmers to get the money they invested in case of disasters. However, he also supported the idea to give farmers a choice – either to ensure their investments or the expected crop production. “The insurance on investment and that on expected yield should be determined and the farmer will choose what type of insurance they need depending on their means. That can be better,” he said. According to the Ministry of Agriculture and Animal Resources, this insurance product was initiated through a human-centered approach that determined which risks farmers wish to be covered as well capacity to pay the premiums. The Ministry said that it will continue to work closely with financial institutions, insurance companies and farmers to adjust the products to make sure that the scheme is responding to farmers’ needs. Insurance premiums and compensations Joseph Museruka, National Agriculture Insurance Scheme Program Manager at the Ministry of Agriculture and Animal Resources told The New Times that the investment is calculated based on the cost of inputs – including seeds, fertilisers, pesticides or fungicides to be used, and the labour. This is what the determination of insurance premiums to be paid by the farmer factors in. For instance, for rice, the investment considered per hectare is estimated at Rwf590,320, according to data from the Ministry of Agriculture and Animal Resources. The insurance premium is 7.08 percent of that investment – or Rwf41,795. The farmer has to pay Rwf25,077 equivalent to 60 per cent of the premiums, while the Government contributes 40 per cent (Rwf16,718). Given that the costs of fertilisers have gone up, Museruka said that the investment-based insurance premiums are expected to rise. If insurance covers production, he said that the premiums will be higher. “In some cases, rice production per hectare is about five tonnes, which can be valued at about Rwf1.5 million. Insurance premiums for that can be about Rwf150,000 as risk increases. That has budget implications including raising the Government contribution and the cost to be covered by the farmer,” he said, indicating that insurance works with numbers [as the high uptake is critical to its success and suitability]. Museruka said that in case of total loss, a farmer is compensated with all the money they invested. However, when the loss is partial, he said, the extent of damage is established and the farmer gets due compensation, but which cannot exceed 85 percent of the invested amount. So far, the Government has spent over Rwf591 million as a Government subsidy to farmers since the inception of the insurance scheme in 2019, show statistics from the Ministry of Agriculture and Animal Resources. More than 48,600 hectares have been insured since the scheme started, while crop farmers have got a payout of over Rwf672 million. In addition, agriculture credits amounting to Rwf2 billion have been unlocked through the scheme.
