An insurance product that caters for farmers' inputs like fertilizers and certified seeds is being delivered through the use of mobile phone.

In a bid to entice more farmers to invest in insurance products, the new partnership between UAP Insurance and Safaricom aims to ease the process of buying insurance products.

Farmers can now buy their insurance covers from agro dealers; the same point where they buy other vital inputs such as fertilizers or seeds.

The agro dealers are equipped with a camera phone that scans a special bar code at the time of purchase of inputs, which immediately registers the policy with UAP Insurance over the Safaricom's mobile data network.

The phone software then sends a text message confirming the insurance policy to the farmer's mobile phone.

"This is the first project to use mobile phones to set up insurance contracts and issue payouts to smallholder farmers in Africa, deploying both our vast data infrastructure and globally acclaimed M-PESA service," said Betty Mwangi, the chief officer of new products division at Safaricom.

Farmers are also able to get weather alerts or market prices using new mobile commerce tools.

Claims are paid by the insurer if there is a major change in weather patterns that affects the farm yields.

This could be too much or too little rainfall. It could also be a change in temperature or the speed of wind.

For the insurance company to get the correct data, it has set up an automatic weather station that monitors wind speed, amount of rainfall, temperature and the intensity of the sun everywhere there are insured farmers.

The stations are powered by a solar system so there is no risk of failure due to lack of power.

They transmit data to a central server every 15 minutes over Safaricom's 3G data network.

When data transmitted from a particular station indicates that drought or other extreme conditions are destined to affect maize or wheat yields, all farmers registered with that station automatically receive payouts directly via Safaricom's M-pesa mobile money transfer service.

"The close link to rural shops and farmers ensures that thousands of farmers will have fast, efficient and reliable services and shows that there is great potential for many other applications that link mobile technology with the needs of farmers and people in rural areas. This is the kind of innovation that underpins our market leadership," said Ms Maina.

The project was first tested in 2009 in Laikipia district, where 200 farmers purchased insurance for seeds and herbicides, and, after the drought, received compensation for 80 per cent of their investment.

The Syngenta Foundation, one of the project supporters and UAP Insurance said about 10,000 farmers will be using the service by the end of this year.

The plan is to then expand into all key farming areas of the country by 2012, with the target of offering the insurance to about 50,000 Kenyan farmers.

Crop insurance is considered essential to agriculture in developed countries but has been largely unavailable to farmers in low-income countries, in part because of the costs of administering "micro" policies.

Conventional crop insurance requires field inspections at the time the policy is issued, and follow-up visits to confirm damage.

Such procedures can be cost-effective for large farms, but are far too expensive to be practical in places like Kenya, where most farming is done on small plots in rural areas.

The administration cost of the insurance is reduced by using the Safaricom data network to record policies and transfer funds, both the premiums to UAP and the payouts to farmers.

The cost of each transaction is minimal -- far less than the price of a SMS message.