Tobacco farmers should insure their crop

Due to the possibility of fire and natural disasters, agriculture can be a risky enterprise, making it imperative for the farmer to have insurance covers to hedge themselves against total loss.

Ironically, levels of insurance in the farming sector in Zimbabwe are low.It is unfortunate that farmers view insurance as an unnecessary expense rather than an investment to curtail future risk, given the small size of their holdings.
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 without immediate gratification.

According to insurance experts, a good number of insurance companies have pulled out of the tobacco industry citing the high risk associated with the crop.Currently, only 10 out of 21insurance companies in the country offer insurance cover for tobacco.
In as much as one may want to blame these companies for one reason or another, insurers can only function well if they have large numbers of members, so the resistance by tobacco farmers to join also affects the business.

The unpredicted climate change in the country and the region at large which has brought heavy and violent rains, at times with hailstorm, should be a wakeup call to tobacco farmers as these conditions are not good for their crop.Year in year out cases have been recorded countrywide where farmers have lost their entire tobacco crop due to the unpredictable hail storms resulting in a sizeable number of the affected farmers committing suicide.

Committing suicide clearly means that the affected farmers would have not insured their crop, thereby registering total loss with no recovery due to the natural disaster. This disaster can be responded to through insuring the crop so as to cushion the farmer against loss.

Not only hail storms are a threat to tobacco production, a lot of farmers have lost their good tobacco crop at the final stages of curing after their bans caught fire.These two are just among other risks and potential for widespread catastrophic losses associated with tobacco production, hence the need for farmers to seriously consider insuring their crop.

One major challenge which the tobacco industry faces is the poor mode of premium collection.Instead of collecting the premiums before a member joins, the insurance companies collect their premiums at the end of the season when farmers sell their crop.

Some untrustworthy farmers end up side-marketing their crop and the insurance companies lose out on premiums.Others even default on payment when they have claimed for damages in the case their crop is destroyed by natural disasters.The companies end up incurring huge losses.

There is great need for the two partners to work harmoniously and cultivate trust for the growth of the industry.Insurance companies should develop a strong relationship with farmers and make follow-ups even at the farm to see the crop they would have insured at every step rather than just wait to carryout transactions at auction floors when farmers sell their crop.

Insurance companies should also work with Agritex officials and farmers unions as this will help them identify farmers and their day to day challenges.

To monitor the activities of insurance companies in Zimbabwe and also to protect the interest of farmers, Government set up the Insurance and Pensions Commission (IPEC)
Addressing delegates at a 2017 Tobacco Agricultural Expo held at Buffalo Downs in Karoi last week, IPEC Deputy Commissioner Pupurai Togarepi highlighted that IPEC is a board governing the operations of the insurance and pension industry in Zimbabwe and its mission is to regulate, supervise insurance companies and pension funds to protect the rights, benefits and other interests of policy holders including scheme members so as to inspire public confidence.

Togarepi urged farmers to register with genuine insurance companies and make sure that they understand every insurance policy, terms and conditions before committing themselves to avoid being duped by bogus and unregistered companies.

Tobacco is one of Zimbabwe's major foreign currency earners and the number of tobacco growers has increased by 15 percent to 81301 this farming season. During the same period last year 70412 farmers had registered to grow the golden leaf.

The 2016-2017 farming season has so far recorded 14283 new growers with a total of 91805 hectares having been put under tobacco.