Building climate resilient agro-ecosystems of smallholder farming
![Family collecting their harvest on a truck, India](/sites/default/files/styles/landscape_16_9/public/2022-07/shutterstock_236726830-min.jpg?h=2cf907fb&itok=1HWaXEul)
InsuResilience Solutions Fund supports the upscale and improvement of an index-based crop insurance and indemnity-based livestock solution for poor and vulnerable smallholder farmers in six Indian states to increase their resilience against extreme weather events.
India ranks among the top five countries vulnerable to natural hazards with high exposure to extreme weather events like floods, earthquakes, cyclones and droughts. In addition, climate models indicate an all-around increase in temperature and rainfall variability across the country. This puts a lot of pressure on the agriculture sector of India, especially on the 78 per cent of overall farmers being smallholders. Thus, it is crucial to build resilience of smallholder farmers to climate change and the risk involved in farming by encouraging them to adopt advanced climate-smart agriculture innovations.
Contributing to this objective, InsuResilience Solutions Fund (ISF), managed by the Frankfurt School of Finance & Management (FS), and financed by KfW Development Bank on behalf of the German Government, signed a grant agreement with the local Development of Human Action (DHAN) Foundation, DHAN International, an initiative established by DHAN Foundation, People Mutuals, registered as a trust under Indian law andacting as a mutual insurance initiative and IBISA, a private Insurtech company. Based on the agreement ISF will co-fund the refinement of the climate risk insurance products, the establishment of risk management centres as well as trainings and capacity building. The project aims to improve the resilience of more than 400,000 farmers in Tamil Nadu, Karnataka, Telangana, Andhra Pradesh, Odisha and Maharastra against drought, extreme rainfall and other climate risks.
The index-based crop insurance and indemnity-based livestock insurance products have been developed and piloted by the Project Partners between 2019 and 2021 with increasing numbers of farmers covered. The support of ISF allows to refined and expand the insurance products to be benefit of small holder farmers. DHAN, People Mutuals and IBISA aim to specifically reach the poor and vulnerable smallholder farmers cultivating crops and raising livestock that are difficult to reach by other safety net programmes or insurance products or have been excluded from the same up until now. The offered insurance system will be complemented by farm risk management advice and has the potential to overcome main weaknesses of the national Agricultural Insurance Program (PMFBY) by providing compensation faster in case of an insurance event, being crop agnostic and additionally being offered as a stand-alone product. The livestock insurance can be used as collateral and by offering to pre-finance premium via loans, the project contributes to increase farmers’ access to finance.
The Project Partners leverage the institutional set up of the Federation Mutuals. As trusts owned and governed by the farmers themselves the Federal Mutuals act as mutual risk sharing groups securing the strongly demand-driven approach complementing the insurance cover with knowledge transfer and education about smart farming as well as risk mitigation and coping strategies.