'No compensation for farmers'

HARARE - The Zimbabwean government says it has no capacity to compensate farmers who lose their crops to natural disasters and veld fires.

Agriculture minister Perrance Shiri, pictured, said farmers should take appropriate insurance cover to mitigate risks associated with harsh weather patterns.

“All farmers in Zimbabwe are responsible for the insurance of their properties against natural disasters.

“The prerogative lies with the individual farmer. So, some farmers are insured and others are not insured. We do not normally look at the statistics or ask for them,” he told lawmakers last week.

This comes as most farmers across the country have lost their crops due to high temperatures and dry spells experienced at the beginning of the 2017/2018 farming season. 

Agriculture experts assert that it is imperative for farmers to purchase insurance in order to prevent total loss of farm property, yield or revenue through a fall in agricultural prices or other disasters.

However, studies show that the levels of insurance in the farming sector in Zimbabwe are very low with agriculture contributing barely five percent to gross premium income of insurance products.

Farmers do not seem to appreciate the insurance products offered by insurers and the basic value of agricultural insurance policy.

Shiri noted that when disaster strikes, normally it is insurance which is supposed to cover such misfortunes.

“The farmer is responsible for insuring their crops so again it is not the responsibility of central government or the financier,” he said.

Economic analyst Francis Mukora concurred with Shiri and said risk management was key in farming because a fire outbreak, hailstorm or floods can damage crops.

“An outbreak of diseases can kill livestock. The unfortunate thing is that such disasters strike when you least expect them. Every farmer should take insurance as an integral part of their operations to compensate losses after disaster strikes,” he said.

Most farmers in Zimbabwe are inexperienced and lack knowledge of farming and how agricultural insurance works.

Academic Catherine Tsikirayi recently noted the fact that an insurance policy is purchased when the business is performing well and that it only becomes useful when the farmer suffers a loss, which could be years down the line, makes it difficult for farmers to pay the premiums with immediate gratification.

However, experts are increasingly agreeing that insurance is even more important in Zimbabwe and other African countries as the climate is becoming increasingly unpredictable and erratic.

This is evidenced by high temperatures and heavy rains which pounded the country at the beginning of the year and resulted in floods destroying crops and livestock, and even human life in some parts of the country.

ZimSelector managing director Luke Ngwerume recently said the country should take advantage of the new economic dispensation to increase its insurance penetration rate, which is currently averaging 1,5 percent, to develop the economy.

“We believe that an increase in insurance penetration rate will have a direct and positive impact on the economy,” he said.

Zimbabwe’s insurance penetration rate, which reached a high of 10 percent in the early 1990s, has been declining significantly over the last two decades with official figures showing that it dropped to a low of 1,5 percent in 2015.

Ngwerume, however, noted that the economic downturn of 2008 should not discourage people from getting insurance products.

“Many people’s insurance and pensions were eroded in the hyperinflationary period resulting in confidence erosion and a new generation of Zimbabweans at home and abroad that either don’t trust insurance or don’t know enough about it,” he said.

“The fact that we have assets means that the crazy period must not stop us from having savings and insurance,” he said.

— The Financial Gazette

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