More than 6 million farmers across the country grow teff, but it’s here, in rugged Adi Ha, where rocks litter the fields like confetti, that this new kind of insurance may take root and spread. An initiative coordinated by Oxfam America and supported by more than a dozen partners, its goal is to help some of the world’s poorest farmers bounce back when drought destroys their crops. And the payout isn’t only in cash. It’s in confidence—the kind that may help propel people out of poverty.
“Without insurance, poor farmers who experience drought might run through all their savings, fall into debt, or sell their livestock and other valuables—often to ruinous results,” says Mengesha Gebremichael, the micro-insurance officer at the Relief Society of Tigray and one of the project’s managers. “In contrast, insured farmers will be more resilient to those shocks. They’ll be in a better position to take out small loans that could help them make big improvements in their next harvest—loans for things like high-yield seeds. They’ll be more confident that they can pay the money back knowing they have insurance to support them if trouble strikes.”
June to October marks the main rainy season in Adi Ha, a critical time for local farmers who depend on the skies to water their teff fields. For poor families living close to the edge, where even a $20 or $30 loss can push them over, there is no room for mishap. Without rain, they face disaster. That’s where the weather insurance comes in. If a certain amount of rain fails to fall at a certain time, farmers who have purchased the insurance can receive a payout to help cover their losses.
In Ethiopia, families have always had traditional ways of coping with extraordinary expenses. If they lose their livestock in a disaster, such as drought, those who are better off will contribute an animal or two to help them rebuild their herds, for instance. Families may also share seeds for planting, or food when it’s in terribly short supply.
But with climate change—and the erratic weather that it brings—the traditional means of surviving bad times may no longer be enough.
“Climate change is dramatically increasing agricultural risk across the planet,” says Marjorie Victor Brans, a senior policy advisor at Oxfam America. “The frequency of droughts and other shocks in Adi Ha is likely to increase, and poor farmers will be among the hardest hit. It’s a hugely challenging phenomenon.”
With 85 percent of Ethiopians employed in farming, much of it rain-fed, the need for new tools to manage the risks is huge. But the market for insurance is miniscule: only about 300,000 people in a country of nearly 80 million now have it. Extending the option to rural areas is loaded with challenges, not the least of them being the concern that poor farmers simply don’t have the money to pay for premiums—even the smallest one.
This new program has solved that problem with a simple solution: It has arranged for the poorest farmers to use their labor to buy insurance, tapping into a new social security initiative the Ethiopian government launched a few years ago. Called the Productive Safety Net Program, or PSNP, it helps about 8 million of the country’s most vulnerable residents by providing them with food or cash in exchange for work. Through the PSNP, 130 Adi Ha farmers are now working extra days on community projects, such as planting trees and grasses to promote soil and water conservation, to pay for their premiums. In this pilot year, Oxfam provided funds to the PSNP to cover this part of the project.
The option to trade labor for insurance has substantially boosted the number of farmers able to participate in the program, nearly doubling the enrollment that was expected.
“It’s good for me to have the insurance as long as I can work and pay with labor,” says Medhin Reda, a single mother who will be working 24 days for her premium. “That is the only asset I have.”
For Selas Samson Biru, who is spending 192 birr on insurance, it will help address the uncertainties that have always been part of farming, especially now that global warming may be altering familiar weather patterns.
“Our season is changing. We don’t know when there will be a bad year and when there will be a good year,” she says. “I believe, after taking the training, this insurance will be helpful during the bad season. This will pay me.”
And the insurance may be extra helpful because it was tailored specifically for farmers like Biru. In fact, she was one of five community members chosen by villagers to join the insurance design team. Twenty-one other farmers participated in a series of test workshops on climate change and financial literacy. Focus group discussions and economic risk simulations carried out in the community helped the design team understand what kind of insurance product would work best in Adi Ha. And on the day of enrollment, about 600 farmers showed up for a host of activities explaining the offerings, including musical performances, a play, peer-to-peer outreach, and financial training.
“Today is a historic day for the farmers of Adi Ha,” said Brans as the activities wound to a close that day and organizers counted the final tally of takers. Among the 200 were 75 women, which represents about 22 percent of all female-headed households in Adi Ha—one of the most vulnerable groups the project is aiming to help. On average, farmers are paying 138 birr for their premiums—or a little more than $12 each. Some chose packages that allowed them to pay as little as 76 birr, or about $6.75. The maximum premium was 288 birr, or just over $23.
“We are experimenting,” said Gebru Kahsay a few months after investing 192 birr into an insurance package. “We started with teff. If we find the insurance is good, we’ll continue. If we fail, we will take a lesson from it.”
Lots of learning has already taken place during the 18 months Oxfam and its partners spent in preparation for the launch of this project. And each of those partners has been contributing its own expertise. Besides the Relief Society of Tigray, or REST, one of the largest aid groups in Africa which has worked closely with the people of Adi Ha, other partners include the Nyala Insurance Company, an Ethiopian firm that is providing the insurance; Swiss Re, one of the world’s largest insurers which has helped fund the launch and is providing technical expertise; and the International Research Institute for Climate and Society at Columbia University, which is providing research on climate data. Additionally, the Dedebit Credit and Savings Institution, or DECSI, the primary provider of loans to families in Adi Ha, helped both to design the pilot and to educate farmers about the pros and cons of insurance.
“We had to work very hard to design a risk management package that was affordable and attractive to farmers, while still being potentially profitable to the insurance industry,” says Bekabil Fufa, an agricultural expert in Oxfam America’s Horn of Africa regional office. “And we had to make it compelling to government and donors who feel it will address the threat of climate change.”
With a solid model now in place, Oxfam is planning in the coming year to expand the initiative into four new villages in Tigray--the region where Adi Ha is located—and into one village in Amhara, another drought-prone region to the south. Eventually, the project partners would like to see weather insurance offered to poor farmers throughout Ethiopia.
It will require a leap of faith by farmers across the country as well as support from the government, donors, NGOs, and the private sector,” says Gebremichael. “But given the long lead times required to build resiliency to climate change, we can’t afford to wait until tomorrow to try.”
]]>— Padmanaban, farmer of Sengapadai
The farmers of the village of Sengapadai, India, make it their business to know what's coming. They are fortune-tellers of sorts, who look deep into history in order to forecast the future. Using methods that have evolved over thousands of years, they watch the movement of the stars, notice the feel of the wind on a given day of the month or year, and carefully observe the behavior of plants and animals. At the heart of the mysteries they set out to unravel each year is this: When will the rains come?
If they miscalculate, the consequences can be grave. In years past, it has meant families postponed not only weddings but also medical care. Sons and daughters have dropped out of school, ending their formal education. They've pawned their jewelry, which represents their savings—even the necklaces that symbolize their marriages. And, says 51-year-old Jakkammal, "In a bad year, there's only one meal a day."
The specter of bad harvests looms larger than ever these days because, as one farmer put it, "We are not getting proper rain."
Rains are coming when they shouldn't and not coming when they should, and the traditional forecasting methods, unable to adapt to the speed of change, are losing their power to predict.
"There's been a vast difference in rainfall patterns in the last 10 years," says Jeeva Rathinam, another farmer. "Before that, we used to plan properly and plant one kind of seed in the fields. Now we have to mix them together and see what comes up."
"The rainfall variations these farmers are seeing now are defeating their knowledge of the way nature functions," says Hari Krishna, Oxfam's research program manager in India.
Climate change, in other words, has come to Sengapadai.
The DHAN Foundation's ACEDRR, an Oxfam partner, has set out to help communities adjust to the changing climate landscape. Researcher B. Arthirani, herself the daughter of farmers, gathered and analyzed 40 years' worth of local rainfall data, and on a sweltering day in May 2008, the farmers of Sengapadai came together to learn the results.
Rains that once fell here predictably in July, she told them, can now be expected to arrive in late August. Then she made a proposal: delay sowing peanuts until between Aug. 10 and 16.
A heated discussion followed. Shifting to accommodate the rains could make some crops more vulnerable to infestations of weeds and pests, and the farmers argued pros and cons of various plans. But an hour later, everyone had come to agreement: the best way to balance all the factors would probably be to plant corn in September.
This is not research as it's conducted at universities, where academics carry out studies at a comfortable distance from actual farmers, and where recommendations are conveyed to the villagers in top-down fashion. That day's discussion, which began with Arthirani's educated guess about what to sow when, ended with a practical plan that drew on knowledge from both inside and outside the community. The ACEDRR study, says Arthirani, "is not a one-way process."
Community members are not simply considered beneficiaries of the study, explained Hari Krishna. "Here, they are partners in the research. They know best about their soil, their sky, their water, and what crops suit their needs."
Outside the meeting place, a heifer nosed along the roadside looking for something to graze on, and a bullock cart passed by with a load of fodder. Women headloading firewood and water walked along the dusty main street in the fierce midday sun, and in the distance, a man stood knee-deep in a pond, splashing water on his team of bullocks after what had probably been a morning of hard labor in the fields.
Fossil fuels and all their labor-saving pleasures seem to have bypassed this village entirely. There were no cars or tractors in sight, and despite the scorching temperature, no one was heading home to air conditioning or refrigerated drinks. It is a painful irony that many of those who have done least to bring about climate change are the most vulnerable to its effects.
DHAN is tackling that vulnerability on two fronts: the disaster-oriented research of ACEDRR is helping ensure that changing rainfall patterns don't lead to catastrophic crop losses, while DHAN's development programs are building resilience in other ways—helping those same farmers organize themselves into self-help groups that enable savings and investment; creating federations that have clout in the marketplace; and helping farmers gain access to high-quality seed, affordable insurance, and lenders that charge two percent interest instead of ten.
It is an approach that is working. By November it was clear that the shift from peanuts to corn was a big success. But there are signs everywhere of the growing security of this community—most convincingly in the confident smile of Jakkammal. The days of one bad harvest plunging the community into debt and hunger, it seems, are over. "After joining DHAN," she says, "we are able to have three meals."
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