Agriculture remains an important sector of the Swaziland economy and productivity gains in this sector are crucial for sustainable economic development.

However agricultural business has always been a risky one.

There is risk of loss in agriculture due to the changing weather patterns, pests, diseases and the fluctuating prices of agricultural products in the market place. Climate changes resulting in frequent and long lasting droughts; excessive rainfall,hail storms and typhoons have become a common sight all over the world including Swaziland. This in turn, affects crop production, forestry and livestock.

Agricultural insurance is one tool that seeks to address these risks which are faced by farmers andthe financial institutions which provide credit for purposes of agricultural production. Agricultural insurance provides protection to the agricultural producers against losses that occur due to the calamities of nature.

In the broad spectrum, agricultural insurance includesinsurance cover for crops, livestock, fisheries, forestry etc. It should be clarified though, that agricultural insurance does not in itself increase agricultural output but helps to compensate farmers for losses incurred as a result of natural calamities. In this way farmers are able to survive the season of poor harvest; repay their financial obligations on the credit facilities and are able to try again in the next season as they are not left in financial ruin.

STATUS OF AGRICULTURAL INSURANCE IN SWAZILAND

There are two insurers offering agricultural insurance in Swaziland at present; Swaziland Royal Insurance Corporation (RIRF) and Lidwala Insurance Company. There is need to promote the use of agricultural insurance in Swaziland in order to generate positive acceptance of this financial tool which could go a long way in assisting farmers during these turbulent times. A study conducted by FinMarkTrust in 2011 on the supply, demand and regulatory framework of insurance in Swaziland, concluded that there is a large potential for agricultural insurance in Swaziland particularly in the subsistence farming sector; to act as a catalyst for sustainable agricultural production in the country.

THE ROLE OF FSRA WITH REGARD TO AGRICULTURAL INSURANCE IN SWAZILAND

The primary mandate of FSRAis to regulate, supervise and develop among others, the insurance industry in Swaziland. Agricultural insurance is one of the focus areas of our drive to deepen insurance penetration. FSRA has been in the forefront in seeking to widen the insurance market, deepening insurance penetration and helping to grow the industry thereby enhancing the welfare of the nation. As a regulator FSRAseeks to achieve this by introducing and regulating microinsurance as a strategic focus area in its quest to alleviate poverty and develop the economy.

WHO ARE THE KEY PLAYERS IN AGRICULTURAL INSURANCE

The connection and close working relationship between insurance companies and credit lending institutions is crucial for the success of agricultural insurance. It should be noted that agricultural insurance does not only protect farmers but it also creates business opportunities for financial institutions as they extend credit to the farmers for agricultural production. It actually becomes easier for financial institutions to provide credit to a farmer with agricultural insurance as this provides a guarantee against losses that the farmer may incur due to natural disasters.

Other institutions that have a crucial role to play in the promotion of agricultural insurance in Swaziland include agricultural cooperatives, suppliers of agricultural inputs and equipment, government as well as agricultural marketing organisations. The promotion of agricultural insurance becomes possible if these institutions recognise the need to protect the farmers in whose success they collectively rely.

Agricultural insurance plays a key role in stabilising the farmers’ income. Besides protecting the farmer, agricultural insurance hadrole to play in the development of the rural economy which in turn strengthen the national economy as a whole. It should also be noted that agricultural insurance is one of a wide spectrum of products and services that should be promoted in Swaziland as a catalysts for aachieving broader economic development, including microfinance and microinsurance in general.

Source - http://www.observer.org.sz/