Insurance spurs agribusiness innovation

Some of the exciting news stories in Kenya are about a new breed of entrepreneurs building profitable farming ventures and unleashing new ideas whose impact is being felt globally.

The most captivating include those about innovation.

Peter Kago, a young farmer in Nyeri, created eight apple varieties which he grows on his farm and exports around the world.

With only Sh 5,000, Anzazi Kiti and her partners launched a natural food seasoning product venture.

The firm exports products to the United States, Switzerland, Germany and countries in Africa.

CREATE WEALTH

Then there are young Kenyans who are determined to create wealth via agribusiness.

Eric Mumo graduated with a first class honours degree but turned down lucrative employment offers to venture into farming in Kitui.

Today, he runs a multimillion-shilling agri-venture spanning dairy, fish, poultry and horticulture.

The golden thread in these inspiring stories is that of creativity and resilience among a new generation of young entrepreneurs transforming agriculture in Kenya.

From crop and animal husbandry to value addition, they have discovered creative ways to higher productivity and new markets.

POTENTIAL

This entrepreneurial bloom is partly fuelled by the enormous untapped potential in the agricultural sector, which accounts for 30 per cent of gross domestic product and 80 per cent of employment.

The manufacturing sector, a key pillar of the economy, also depends heavily on agricultural raw materials and semi-processed inputs.

With value addition now a national priority, there are immense opportunities for youth to venture into agribusiness as a means to creating wealth and jobs.

This essentially involves changing raw agricultural produce through processing and packaging for higher returns.

RISKS

But opportunity comes with risks. For entrepreneurs in agriculture and agribusiness, multiple risks including drought, floods, disease and climate change loom large.

Add to these political risks affecting markets and prices.

But for Kenya to fully harness the potential of innovation in agriculture, there is a need to adopt insurance as a risk mitigation tool.

Agriculture insurance — encompassing crop and livestock — protects farmers from certain risks and comes with numerous benefits.

First, it improves farmers’ ability to cope with hazardous events such as drought and builds resilience by boosting farmers’ ability to recover from disasters, thus achieving business continuity.

SUSTAINABILITY
Second, in addressing the risk component, it offers comfort to investors to fund new ventures and processes that add value to the entire chain.

It serves as a catalyst for agribusiness innovation.

Third, agriculture insurance is critical in ensuring sustainability in agriculture by increasing resilience to shocks, boosting access to much-needed credit to expand output and encouraging agri-entrepreneurs to take risks through innovation.

Kenya needs to build a long-term and efficient insurance system for the agriculture sector to not only ensure agricultural sustainability but also boost food security.

ACCESS

Happily, the government has initiated collaboration with insurance sector players with a view to increasing access to agriculture insurance.

Among the several initiatives under way is Kenya Livestock Insurance Programme, targeting pastoralists in arid and semi-arid counties and has benefited 12,000 households.

To nurture more young entrepreneurs and innovators, we have to address the risks they constantly face in building thriving agribusiness ventures.

More importantly, we have to create incentives for innovation and risk-taking by making agriculture insurance accessible to budding entrepreneurs.

Mr Muindi is the CEO, Kenya Orient Insurance Limited. [email protected].