Analysis Of Weather Index Insurance's Effect On Food Security And Income Among Small-scale Producers In Eastern Kenya

Small-scale producers in developing countries,mainly depend on rain-fed agriculture and agricultural related activities for their livelihoods.These farmers contribute up to 70% of the global food,hence playing a vital role in contributing to food security.In spite of this,agricultural production has increasingly become elusive because of the many risks that render the returns from the farm to be highly uncertain.This has been confounded by climate change and the unpredictable weather conditions.As a remedy to the escalating risks in agriculture,Weather Index Insurance(WII)products like Kilimo Salama(Safe Agriculture)insurance scheme have been developed to mitigate and insulate farmers from drought and excess rain risks.Many of the hypothetical and empirical studies carried out previously tend to focus on the willingness to pay or demand as well as the uptake of WII.However,there are limited studies(if any)that evaluate the impacts of such innovations on farmers.The aim of this study is to provide insights on the effects of WII on food security and income among small-scale producers.The study also examines the perceptions of the farmers towards the effectiveness of WII which is an important feature in commercialization of WII products alongside some selected common risks.This was informed by the fact that in developing countries,many of the index insurance products are still in their pilot stages of implementation.Thus,addressing the question about perception of farmers in upscaling the use of WII products is vital.Further,the study explores the multiple factors that influence uptake and how the same factors compare in the extent of adoption of the WII.The study was carried out in Embu County,Kenya.Data were collected from a sample of 401 smallholders who were identified through multi-stage sampling.A five point likert scale that was based on insurance scheme effectiveness as a tool of risk mitigation was used to assess perception of farmers while an Ordered Probit model was used to determine the factors that influence farmers' perception towards the WII.The findings do not strongly suggest a negative attitude towards WII thus,controverting hitherto studies.Rather,the study postulates that other risks facing smallholders and their risk response disposition may distort and override farmers' attitude towards WII.In addition,it was revealed that Sex of the HHH,household size,if a farmer experienced crop loss in the previous farming seasons,off-farm income,if a farmer received compensation,the level of education of the HHH,if the HHH accessed credit and group membership had a significant influence on the perception of the smallholders towards the WII.We further demonstrate that the use of WII as a way of cushioning smallholders against the vagaries of nature like excess rains and drought could improve the smallholders' food security and income status.Therefore,using the Propensity Score Matching we model the effects of adoption of weather index based insurance decision on food security and income of the smallholder farmers.We find that a positive impact on food security and income is associated with the uptake of index insurance.The study also applied a Cragg Double Hurdle model to estimate the factors that influence participation and extent of participation in WII.The results reveal that the short rain season,household size,land size,perception of the HHH,ownership of mobile phone and location of the farm land(Embu town station,Ishiara station,Siakago station & Gachoka station)positively influence farmer's probability to participate in the index insurance programme.The distance to a registered agro-veterinary shop outlet,premium charge,group membership,Runyenjes station and distance to the local weather station influenced probability to participate negatively.Similarly,ownership of a mobile phone had a positive influence on the extent of participation in WII while size of the household,distance to a registered agro-veterinary shop outlet,and land size were significant with a negative effect.We underscore the fact that some of the variables like land and perception that had dissimilar effects in the two decisions of adoption and extent of WII adoption could provide critical information.The study brings forth interesting results about the implication of WII on food security and income to the smallholder farmers and this information would be useful to insurers,researchers,extension service providers' policy makers and other stakeholders,who are involved in promoting WII as a pathway to enhancing agricultural productivity and rural development.The findings also suggest that WII technology can benefit farmers more through up-scaled use in the context of their socio-economic conditions and institutional arrangements.