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Agricultural Finance: Zimbabwe

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Feed the Future Zimbabwe Livestock Development

Livestock Insurance: The Key to Resilience

In Zimbabwe, the few players in the livestock insurance sector primarily focus on large-scale commercial farms, though 90 percent of the cattle in the country are owned by smallholder farmers. The Feed the Future Zimbabwe Livestock Development program is working with banks and microfinance institutions to bridge this gap and explore ways to increase smallholder livestock farmers’ resilience.

Livestock insurance can protect smallholder farmers from the potentially devastating loss of cattle through disease and natural disasters. By paying an annual premium and following the conditions of the policy, farmers are covered for the value of their cattle in the event of loss for reasons such as natural disaster, calving complications, and theft (depending on the policy options). The farmer gives value to his or her animal during the application process, and in the event of loss, the insurer will replace the animal by paying the breeder the value of the animal insured.

The program is engaging simultaneously with smallholders and insurance providers to foster mutually beneficial relationships. We train farmers in basic business skills, emphasizing the value of livestock insurance, while working with banks and microfinance institutions to show the potential for expansion into the smallholder farmer market.

The program began by focusing on high-value investments such as improved breeding stock, which incentivizes farmers to purchase livestock insurance since these cattle represent a significant investment with average value over $1,000 per animal. Insurers maintain a manageable level of risk through the greater income potential for farmers represented by improved breeds as well as requiring good animal husbandry practices, skills promoted by the program, in the insurance policies.

One of the program’s main focus areas is increasing national milk production and improving dairy genetics through the introduction of pedigree dairy heifers. Nearly 100 client farmers have received in-calf heifers from South Africa, and are working with the program to insure these valuable animals.

For example, 20 program farmers in Gokwe bought 20 improved in-calf dairy heifers through a loan scheme funded by both the government and private partners to reduce the country’s milk deficit. After seven of these heifers died from calving complications, demand for livestock insurance increased. The program linked the 13 farmers with the remaining heifers (valued at $1,350 per heifer) to Zimnat Lion Finance Insurance.

“Our commitment as Zimnat is to support the efforts being made by Fintrac to end hunger and poverty in Zimbabwe by providing tailor-made agricultural insurance solutions that make this vision a reality for our farmers,” said Willard Gadziwa, Zimnat sales and business development general manager.

Zimnat has been a leading player in the Zimbabwean insurance industry since 1946. Zimnat developed a livestock policy that provided insurance against cattle death arising from fire, lightning, electrocution, calving losses, snakebites, emergency slaughter, and theft at an annual premium affordable to farmers: a cost equivalent to two just weeks of milk production ($65.75). This policy included requirements around good animal husbandry practices such as the use of fenced paddocks, vaccination programs, and recordkeeping.

“I lost my DRP Jersey cow from calving difficulties before I knew about the policy, and I could have recovered it through the insurance if I had signed up for it,” said dairy farmer Mlanjeni Hlanganiso. Hlanganiso said he plans to insure all his high-value dairy cows in the future against uncertainties.

Since losses from mismanagement (preventable pests and disease) are not covered in the policy, farmers have further incentive to implement program-supported livestock management practices. For the Gokwe farmers, no cattle deaths have been reported since farmers got their livestock insured since the only loss was caused by calving difficulties (dystocia), caused by using bigger bulls on smaller heifers, which could have been prevented by the breeders in South Africa. For covered causes, the farmer is paid for the full value of the cow.

“No cattle have died so far since farmers have adopted the insurance, as the practices stipulated as conditions for insurance are helpful to cattle survival,” said farmer Christopher Muchimbiri, who sees the value of insurance over loss of such high-value animals.

So far, the program has helped smallholders over $1,000 per cattle through insurance and increased incomes for 1,800 beef and 1,200 dairy smallholder farmers in Zimbabwe, and is on pace to reach even more through training on good animal husbandry practices.

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