The Ministry of Agriculture says it has insured the K160.2 billion Affordable Inputs Programme (AIP) to mitigate losses likely to arise due to poor weather shocks such as drought or floods.
The move to insure the AIP follows advice from National Association of Smallholder Farmers of Malawi (Nasfam) and Farmers Union of Malawi to government last year.
Minister of Agriculture Lobin Lowe said in an interview on Thursday that government has secured the crop insurance from African Risk Capacity of the African Union whose insured sum will be determined by the likely extent of the damage.
He said the insurance cover will ensure farmers are compensated adequately for the losses they may incur due to climate change-related impact.
Said Lowe: “We had more than two insurance companies which we engaged out of which we signed a deal with one.
“As a ministry, we feel safe with AIP because we have insured our farmers from any weather-related catastrophe such as drought and floods.”
One of the insurance companies, Pula Advisors of Kenya, confirmed to have had discussions with the Ministry of Agriculture on possibilities of insuring the AIP.
The firm’s commercial manager for Africa Cedrick Todwell said in a telephone interview from Kenya that they did not succeed, but were optimistic of business in 2021/22 season.
The 2020/21 National Budget Review for the Agricultural Sector conducted by Nasfam recommended the introduction of crop insurance for the K160.2 billion AIP.
In its analysis, Nasfam feared that the AIP’s K160.2 billion may go down the drain if farmers fail to realise intended yields as per government expectations due to poor weather emanating from adverse effects of climate change.
Nasfam chief executive officer Betty Chinyamunyamu on Thursday commended government for taking their advice.
She said: “This is a commendable development as it will ensure national food security in case of any eventuality and safeguard the big investment made in AIP.
“Insurance is critical part of any investment and we would not need to invest such sums of money without risk management in place.”
Agriculture policy expert Tamani Nkhono-Mvula described the development as good news, saying it is a move in the right direction.
He said: “I am sure the conditions are flexible and attainable. Four years ago we had a similar insurance in which we had put ourselves in a difficult situation to accept unattainable conditions.”
In the 2020/21 National Budget, Minister of Finance Felix Mlusu announced that out of the K160.2 billion allocation, K132.7 billion was for fertiliser payments, K25.7 billion for maize seed and K1.8 billion for logistics.
Under the programme, farmers have been buying fertiliser at K4 495 per 50 kilogramme bag.