Kenya: Livestock Insurance - A Chance to Outsmart Drought?

A village meeting in Dirib Gombo for farmers who took out livestock insurance to receive their first payout after a prolonged drought in the region.
9 January 2012

Marsabit District — The first thing that hits a visitor to Ginda village in northern Kenya is the smell.

Farmer Haro Sora's land is littered with the carcasses of cattle and donkeys that have collapsed following an intense, prolonged drought. A skull here; half a ribcage there. In some places there are whole animals slumped on the roadside.

Ginda, in Marsabit District, has been hit by the Horn of Africa drought. It triggered a food crisis affecting around 13 million people in Kenya, Somalia and Ethiopia, by the time the rains finally returned to Ginda after more than a year.

The fact that the food crisis in the Horn was the result of a livestock crisis has been well documented. The area is a major pastoralist zone. When vegetation for grazing began to dry-up and livestock started to die, the knock-on effects on farmer livelihoods became strikingly clear.

Some observers balk at the idea of a financial institution selling insurance to already cash-strapped smallholder farmers to protect them against the risk of drought. The 650 livestock keepers in Marsabit, who are delighted to be receiving their first payouts, might give critics pause.

Sake Dabasso Halake stands proudly in front of Equity Bank's Marsabit branch. She smiles, clutching an envelope filled with 16,000 Kenyan shillings that she just received. It was her insurance payout for the 10 cows she lost during the drought.

The Index-Based Livestock Insurance scheme is run by the Nairobi-based International Livestock Research Institute (ILRI), in collaboration with several technical partners, the government of Kenya and commercial partners UAP Insurance and Equity Bank. The project is funded by UKAID, USAID and the World Bank, among others.

At a time when global attention for the worst drought in half a century has waned, nearly all of the farmers involved with the scheme were compensated. Researchers estimate that anywhere between 20-30 percent of livestock in Marsabit has been lost.

In a district where food aid makes up 15 percent of the economy, ILRI estimates that the trade in livestock is responsible for about 65 percent of the money coming into households. While the new insurance product won't be able to cover the total loss, it does offer participating farmers and herders an opportunity to recoup some of their losses.

The program uses information technology to operate. What triggers a payout is not how many livestock die, but whether satellite images confirm that forage availability in the region's rangelands has dropped below a certain level. When this happens, farmers who took out insurance get paid. Using satellites to track forage cover gets around all kinds of problems, such as claims being made for animals that have died of disease or neglect, rather than drought.

The project highlights the increasingly important role of Kenyan scientists and private institutions in developing effective initiatives for Kenya and its people. Civil society organizations, including a people-to-people effort called Kenyans4Kenya that sprung up to collect food and money in response to the famine.

"Kenyans are stepping up for Kenya, not just in response to the region's humanitarian emergency like the Kenyans4Kenya campaign, but also in developing long-term solutions that manage risk and reduce vulnerability," said Jimmy Smith, director general of ILRI.

Global research and innovation partnerships with Cornell University, the University of California-Davis, Syracuse University and other partners also played an important role.

"None of this would have been possible without new innovations in index-based insurance products that make it more efficient to insure livestock, predict their mortality, and deliver timely payouts to participating herders," said Smith.

"The global community is questioning the role of agricultural research in delivering real impact on the ground," he said. "Research can't do it alone. But this project is proof that public research combined with local knowledge and private sector partnerships can provide solutions to problems that were cast off long ago as too complex or too costly to address."

At a recent meeting in nearby Dirib Gombo village, where some of the farmers received their payouts, others were unconvinced about the insurance scheme. Inevitably, some were frustrated that they had taken out insurance in the year the scheme was launched, and despite losing animals, had received no payout because the forage threshold was never breached. They decided not to renew their policies -- and then the drought hit.

The experience of the insurance scheme shows that no one intervention addresses all problems. As successful as it has been for many who lost animals and livelihoods, others would have needed additional help.

Back in Ginda Village, the cruel irony is that even if farmer Haro Sora had taken out livestock insurance, he probably wouldn't have received a payout for many of the dead animals that were seen scattered around.

Already weakened by months of near-starvation, the animals were unable to endure the colder weather that followed the long-awaited return of the rains. They died from hypothermia, with green shoots springing up around them.

View related photo essay here.

Jeff Haskins is director of the Nairobi office of Burness Communications, and Neil Palmer is with the International Center for Tropical Agriculture.

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