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Rice Insurance helping Rwandan Farmers Overcome Climate -Induced Losses

By: Rene Anthere Rwanyange

In the last two decades, agriculture in Rwanda was substance based though the majority was involved in it; the farmers were in it just for daily bread.

There was no serious investment in this sector, very few including youths were involved in agriculture as published by the Ministry of agriculture report of 2021, and hence this sector was valueless.

So, farmers who depend on rain-fed agriculture and use low-technology farming methods are particularly feeling the effects of climate change, especially if they’re not protected by some form of insurance.

In 2020, rice cooperatives in Gisagara District, suffered a loss amounting to Frw 13,538,113 million estimated at US$12,486 due to floods during the agriculture season 2020A.

The Cyril rice cooperative lost 38 hectares of rice and Nyiramageni cooperative located in marshlands of Southern Province lost 45 hectares.

In order to help rice farmers militate against such risks and losses, in May 2019, the Ministry of Agriculture and Animal Resources (MINAGRI) launched the National Agriculture Insurance Scheme (NAIS).

The scheme helps individual farmers, and cooperatives to access financial services and ensure flow of credit to the sector.

In addition, it helps farmers to increase agricultural productivity while providing them with security for investment.

How it works:

Rice farmers apply for the insurance paying 60 per cent; they receive 40 per cent of government subsidies for the insured crop.

In Rwanda, the market premium rate which is the rate of return for insurance rice is 7.08 per cent per hectare.

The rate varies depending on the type of crop, the premium rate for maize is at 8.2 per cent, beans, potatoes, and chili all at 8 per cent respectively.

Still, crops cannot be insured against risks such as:  theft, war, birds and other animals, late harvest and cultivation of damaged seeds, which are not suitable for consumption as well as cultivation in a non-designated area.

The cost of insurance is calculated based on the capital employed on the plan and the area covered by the insurance. This product insured is included in the contract.

A farmer who experiences a loss is quick to report to the insurance company by filling out a form. For the assessment, the insurance looks at the field before confirming its size, and damage.

A yield estimate is made in presence of representatives from government and cooperatives. A report of the findings is approved and submitted to the insurance company for payment which returns to the farmers or cooperative in less than a month.

Currently, the NAIS program is working with Prime insurance, Radiant, Sonarwa, Bank of Kigali, and UAP.

Since 2019 when the NAIS was launched, where insured and more than 10000 rice farmers have already enrolled in the program.

Farmers can expect up to 85 percent compensation on costs of investment and their expected yield is based on the average produced by their farm.

“By limiting compensation to 85 percent, we help train farmers that risk mitigation is better than compensation,” said Joseph Museruka, NAIS Programme Manager at the Ministry of Agriculture and Wildlife.

In Rwanda, rice is cultivated by 72,000 farmers on more than 22,047 Ha of marshlands in two seasons producing around 80,000 metric tons per year.

Up to 72,000 rice farmers operat under 122 cooperatives, out of which 87 are registered officially with Rwanda Cooperative Association (RCA), with an average of 0.2 ha/household.

The country has not yet achieved self-sufficiency, so the gap is presently filled through importation of rice grains mainly from Asia and Tanzania.

On average, the country imports 26,736 tons of milled rice. In 2015, Rwanda imported USD 37 million worth of rice in different varieties.

Based in Gisagara district, Cyril Rice Cooperative paid Rwf 1,400,069 with 40 per cent being government support, and the cooperative was paid Frw 3,500,174 as compensation by the insurance company.

Also, Nyiramageni Rice Cooperative paid Rwf 3,350,454 for insurance cover. They’re compensated Frw 5,584,077 with 40 per cent being government subsidies.

Ntende cooperative in Gatsibo district has 3,761 members who grow rice on 600 hectares of land.

In the last 3 years, the cooperative received more than Rwf 100 million in compensation from Bank of Kigali insurance.

Elysee Rugwizangoga, the president of the cooperative, affirms that crop insurance has helped them to militate against risks.

Rwizangoga notes that crop insurance guarantees revenue and promises to replace yield losses. At one point we lost of 83.89 hectares of rice to floods.

Crop insurance is a vital element that can guarantees access to finance for small farmer holders as it helps de-risk agriculture farming.

Mediatrice Mukarubiyza a member as well as a trainer in Ntende Cooperative, who lost 12 hectares of rice at that time, received over Rwf 1,482,000 in compensation having invested Rwf 1,750,000.

 “I paid the premium of Rwf 1,260,000; the floods washed away the hectares of rice.” She adds.

“As farmers, we’re motivated to pay insurance to remain secure” She points out adding,” Before joining the scheme, we used to head into harvest with the potential for crop loss”

Another farmer Clementine Muhorekeye in Gatsibo district says crop insurance is a benefit because it protects against risks resulting from natural causes.

The 36-year old mother of two who spent around 2,500,000 says that she received Rwf 4,071,115 in compensation for having lost 22 hectares of rice due to floods in 2020.

“Insurance encourages us to invest in our farms, in this way; we’re able to raise our yields unlike before, and we used to withstand such risks by borrowing from informal sources, or sell assets like cattle.” Muhorekeye adds.

Since the launch of scheme, agriculture sector is contributing to the Rwandan economy with financial resources flowing from farmers to the insurances premiums and from the latter to farmers (indemnities).

The insurance penetration rate in Rwanda currently stands at 1.7 per cent low.  Ovia Tuhairwe the deputy Managing Director of Radiate insurance company thinks the reason is because of low education by farmers.

“We have to sensitize farmers, we have to change our mindset, and we invest in capacity building of our staff. The scheme is affordable” Tuhairwe adds.

James Bizimana a farmer in Kayonza district says that the scheme is good but it takes time- two months to compensate which is discouraging.

“Not all crops are insured, we need to have orchards also being insured against risks, ”Bizimana adds.

 Experts also say that the level of awareness on the benefits of undertaking agriculture insurance is low and farmers need to be sensitized on the advantages of undertaking agriculture insurance. 

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