SUM-Africa project offers unique insurance service to farmers in Uganda
Severe drought and climate change create unsustainable growing conditions in Africa, driving poverty and food shortages.
In Uganda, farmers face increasing exposure to risks associated with changing weather patterns, suffering from severe drought and the effects of climate change. As a result, farmers’ crops are often destroyed in these poor conditions with no insurance to help recover the cost, sending many African farmers into a vicious cycle of poverty while also creating a devastating food shortage.
To help protect farmers and increase sustainable food production, the SUM-Africa project, supported by the Geodata for Agriculture and Water (G4AW) program of the Netherlands Space Office (NSO), provides satellite-based drought index insurance to protect these smallholders, offering a cheaper insurance product where there are very few other options.
Now in its fifth year, SUM-Africa consortium operates on a commercial basis, insuring 75,000 farmers in 2018, with sales numbers expected to double over the next 2 years.
This week, the Ugandan Agro Insurance Consortium (AIC) and the Dutch company EARS signed a long-term contract to continue the delivery of this service. The AIC provides the insurance and EARS, lead partner in the Sum-Africa project, provides the satellite-based drought index.
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Assessing the unique risks
Agricultural index insurance products are based on an index of elements like weather patterns and what crops are being grown. The drought index insurance products provided through the SUM-Africa project are based on Meteosat derived Relative Evapotranspiration (RE). It sends satellite-based data daily monitoring weather and climate conditions for crop growth.
This combined with historical data of the entire African continent allows insurers to assess risks and set prices and payouts appropriately without having to visit the farming site, lowering transaction costs as a result.
These index insurance services are delivered through a consortium of index provider, insurers, brokers and aggregators.
More detailed product information can be found through G4AW.