There are an estimated 270-500 million smallholder farmers in developing countries. However, 97% have no agricultural insurance (MIN, 2022). In Burkina Faso, we understand that out of the approximately 50,000 farmers that WFP works with, only 4,000 have benefitted from agricultural index insurance to date. This indicates a need to create more scalable, cost-efficient solutions.
In addition, most smallholder farmers globally do not have access to climate risk insurance. Even where it is available, the uptake of insurance solutions lags behind due to lack of affordability, delayed pay-outs and a lack of transparency. For example, even WFP needs to subsidise most of its index insurance programmes. Most index insurance programmes payout 3-6 months after the end of the season (120 days in WFP's experience), by which time farmers' households may have already faced a food crisis, livestock death, interrupted schooling, or other impacts to their livelihoods and well-being.
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