Kenya has launched an insurance program designed to address challenges that agricultural producers may face when there are large production shocks, such as droughts and floods. The World Bank-backed Kenya National Agricultural Insurance Program is designed as a partnership between the government and the private sector. World Bank Country Director for Kenya, Diarietou Gaye, said in a statement on Monday that one "program line" would focus on livestock insurance, while another would focus on maize and wheat insurance. "This program is aimed at improving farmers' financial resilience to these shocks and will enable them to adopt improved production processes to help break the poverty cycle of low investment and low returns," Gaye said in the Kenyan capital, Nairobi. She said the majority of the poor in Kenya are farmers, thus the program has the potential to have a significant impact on Kenya's economic development. Experts say drought is the greatest cause of livestock mortality in Kenya's Northern Arid and Semi-Arid Lands. Through the new Kenya Livestock Insurance Program, the government will purchase drought insurance from private insurance companies on behalf of vulnerable pastoralists. Satellite data is used to estimate the availability of pasture on the ground and decide payouts to pastoralists when availability falls. KLIP was introduced in October 2015 for 5,000 pastoralists in Turkana and Wajir areas and is expected to be scaled across the region by 2017. Experts say production shocks such as droughts and diseases pose similar challenges to maize and wheat producers and the risks diminish banks' appetites to lend money to farmers. According to the World Bank, the program addresses these challenges through an "area yield" approach. Under the approach, farming areas are divided into insurance units, and if average production in one of the units falls below a threshold, all insured farmers in the unit receive a payout. Olivier Mahul, Program Manager of the Disaster Risk Financing and Insurance Program at the World Bank, said the partnership between the government and the private sector for the benefit of vulnerable farmers builds on international practice. "The program introduces a state-of-the-art method of collecting crop yield data, using statistical sampling methods, GPS-tracking devices, and mobile phones. This offers the promise of greater accuracy and transparency. This program could pave the way for other large scale agricultural insurance programs in Africa," Mahul said. The program is expected to help Kenya reduce the financial burden of natural disasters. From 2005 to 2011, the government estimates that it spent on average more than 70 million U.S. dollars per year on disaster relief. By enabling better financial protection for the most vulnerable, the government hopes to reduce its need to provide financial support following natural disasters. The program is starting up in Bungoma in Western Kenya, Embu in Eastern Kenya, and Nakuru in northwestern Kenya this month and plans to reach 33 counties by 2020. Source - shanghaidaily.com