WFP advocates for integrated climate risk management instruments

Funded by Kreditanstalt für Wiederaufbau (KFW), the partnership between ATI, WFP, and Pula helps realize Ethiopia's Largest Crop Insurance Program that aims to secure the future of smallholder farmers. As part of this initiative, the Oromia Insurance is to pay 39 million ETB to smallholder farmers.

For millions of Ethiopians, farming is not merely a profession, but a way of life. It is also a risky endeavour impulse of nature and unpredictable market forces. About 24 million smallholder farmers depend on rainfed subsistence agriculture as their main livelihood in Ethiopia. However, climate-related risks and pests affect yields and discourage farmers from investing in improved agriculture practices that minimize the risk exposure on their investments, increasing their vulnerability to food insecurity. 

WFP advocates for integrated climate risk management instruments such as insurance to protect farmer’s investments and help them recover from crop failures, livestock losses, or damage caused by shocks. WFP enables farmers and pastoralists vulnerable to climate extremes to manage climate risks using an integrated set of tools that include access to microinsurance, financial services and participation in nature-based solutions to reduce overall risk. Through its R4 programme in Ethiopia, WFP planned and oversaw the rollout of the agricultural insurance scheme in Amhara region and provided the insurance premium for the farmers.

In response to the pressing need for climate risk solutions in Ethiopia's agricultural sector, Agricultural Transformation Institute (ATI), United Nations World Food Programme (WFP), and Pula Advisors, and funded by the German Federal Ministry for Economic Cooperation and Development (BMZ) through KfW Development Bank, 122,000 smallholder farmers in Meher 2023 were insured against climate risks, including drought, excessive rainfall, hailstorms, pests, and diseases.

The initiative primarily insured inputs, particularly fertilizers for smallholder farmers in the Amhara Region, with prospects to extend its reach to 7.5 million farmers across various regions utilizing the IVS infrastructure. The innovative approach resulted in the largest-ever crop insurance program in Ethiopia with a straightforward process, where farmers access crop insurance when they buy their inputs. 

Of the insured farmers, 52,000 faces significant crop losses in the last season. Through the initiative, those who suffered losses were provided compensation totaling ETB 39 million.

Speaking in the payout ceremony in April 2024, WFP’s Country Director a.i Chris Niko said “WFP's commitment to utilizing insurance as a risk management tool is rooted in our mission to alleviate hunger and build sustainable food systems. WFP brings to the table not only our commitment to continue supporting the Government of Ethiopia to build the resilience of our farmers but also the knowledge and experience in delivering insurance schemes to farmers in a scalable and sustainable way. We look forward to continuing to work together with the Government and all partners to provide innovative solutions to promote climate-resilient agriculture and contribute to a food secure future for all Ethiopians.” 

The payout ceremony provided a platform for stakeholders to hear firsthand experiences from farmers benefiting from the program. The official payout cheque was presented to the Amhara Regional Bureau of Agriculture on the behalf of farmers.