5 Feb 2011 Mr. Fritz Syngenta Foundation for sustainable agriculture


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  • Farmforce = a full circle solution leveraging the rapid penetration of mobile phones in developing countries.
  • 5 Feb 2011 Mr. Fritz Syngenta Foundation for sustainable agriculture

    1. 1. Agricultural Index Insurance InitiativeAccelerating Agricultural Insurance in India –the case of Kilimo Salama in KenyaFICCI seminar, New Delhi, 5 February 2011Fritz Brugger, Syngenta Foundation for Sustainable Agriculture
    2. 2. Kilimo Salama – Overview• Background – Kenya – Insurance situation – Partners• Challenges – Distribution – Literacy – Affordability• Success factors – Role of technology – Product design – Added value services – Private sector partnerships
    3. 3. Agriculture Insurance Situation in KenyaInsurance setup differs from India in several aspects:• Product availability: – Multi-peril crop insurance: product is in the Market, available only for large scale farmers (500+ acres)  9.6 mn Kenyans involved in smallholder agriculture (FAO CountrySTAT (2008)) – Index insurance introduced in 2009, still in pilot stage• Role of government: – Government plays no active role in providing agricultural insurance: – No subsidies available – No mandatory insurance linked to credit – Limited availability of historic weather data and AWS• Access to agricultural finance – Limited because of magnitude of risk
    4. 4. Kilimo Salama – Partners• Syngenta Foundation for Sustainable Agriculture – Is a not for profit organisation with the mandate to support smallholder famers by increasing productivity, improving access to markets, and mitigating farming risks. – Syngenta Foundation has been established by Syngenta International AG, an agro chemical and seeds company that works in over 90 countries and has 26,000 employees.• UAP Insurance Limited – a leading Kenyan insurance and financial services company with a presence in Kenya, Uganda and Southern Sudan. – In March 2009 UAP insurance started a pilot to offer insurance to small farmers in Laikipia district and is now looking to expand this.• Safaricom – Largest telecom operator in Kenya. Pioneered mobile payment service M-Pesa with currently 9.4 mn accounts.
    5. 5. Current status of pilot and project goalsInsurance products are only sustainable if they can reach scaleWe currently insure 12,000farmers in 5 areas in KenyaWe aim to offer insurance tofarmers in all agricultural areasin Kenya by 2012This will require investment in:The weather station network from30 300A significant investment in financialeducation5
    6. 6. Agroclimatic zones6
    7. 7. Challenges to index insurance growth in Kenya Challenges Responses Weather data Setting up network historic and AWS Distribution Use of new distribution channels no branch network in rural areas Transaction cost Use of technology high number of small policies Affordability Product design high premium due to high risk Partnerships Added value services Financial literacy Training low insurance literacy Added value services low trust in insurance
    8. 8. Automated Weather stations• Setting up AWS network• Rainfall, wind, temperature, humidity, radiation, leaf wettness• Remote monitoring of weather station operations• Security and operations• Preparing private company• Coordination with Kenya Met Dept
    9. 9. Overcoming the Distribution bottleneck• Agrovets: Closest allies of farmers: Farming advice, Loans, Business success• 8’000+ agrovet shops across Kenya’s farming areas – Small shops, Very busy around planting (up to 70% of sales in two month)• Challenges – Insurance is not their core product - but has a positive impact on their business. – Insurance registration process must be fast and convenient9
    10. 10. Mobile Technology – Reducing Transaction Cost Empower stockists Policy management Mobile Premium collection Platform Claims payment Training monitoring Client communication Added value services
    11. 11. Kilimo Salama Mobile Application Agrovets are given a mobile phone with the Kilimo Salama application. When a farmer wishes to purchase insurance the stockist starts the Kilimo Salama application and registers the farmer in a four-step process
    12. 12. Farmer confirmation and payout The insurance policy is automatically created on the server and the farmer receives an instant confirmation of his/her insurance coverage via SMS. Payouts: Automated decision on payouts Payouts to all farmers under the same weather station Payouts directly to the farmer’s phone (M-Pesa)
    13. 13. Making Marketing and Training more effective 1. Field staff holds the first training 2. At the end of the training the attending famer send keyword- T101 sms to server 3. All farmers are registered into the database linked to an area and trainer 4. Follow up information can be requested by text or via a helpline. 5. Future trainings and simple extension information via mass SMS. 6. When the farmer buys the product she uses her phone number and she is recognised as linked to t101 = Joseph. Cut costs on follow up training and mobilisation13 Real time monitoring and rewarding of field personnel
    14. 14. Product design – removing the entry barrier• Entry barriers: lack of financial literacy, lack of trust• Create “entry level product” that allows farmers to “try out” insurance• Pay as you go• Over time, farmer can move towards higher level products coverage premium
    15. 15. Affordability – partnership with input suppliers• Risk is high and therefore the premium for a reasonable risk coverage is high and for many farmers beyond their affordability• Partnerships with the private sector as sustainable alternatives for subsidies• Input companies have interest in success of farmers Partnership with private sector suppliers
    16. 16. Affordability – added value services
    17. 17. Agricultural Index Insurance InitiativeThank you!fritz.brugger@syngenta.com
    18. 18. Reducing transaction cost: Weather index based insurance• Index model – Relation weather conditions & crop growth using agronomic models – Historic weather data used for pricing risk• Automated weather station measures conditions• If weather station shows loss, then all insured farmers are paid, irrespective of on- farm loss• No farm visits = low transaction costs
    19. 19. Automated Weather stations• Send data every 15 minutes to central server over GPRS network• Store and resend data in case network is down• Solar powered• Remote monitoring of weather station operations• Most weather stations are placed on public ground (schools)• Data are also provided to local schools, used in geography classes