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Satellite Data for Climate, Water and Food


FESA Micro-insurance: reaching every farmer in Africa

Delft, April 2014  -  Costs and lack of dataare major challenges in de development of agricultural insurance in Africa.These problems have effectively been addressed by EARS Earth EnvironmentMonitoring from Delft, the Netherlands. The company has successfully developed anddemonstrated a Meteosat based index insurance system that provides affordabledrought and excessive precipitation insurance to every farmer in Africa.  The final technical report has just beenpublished and is now available to interested parties.  

FESA Micro-insurance is a Meteosat based drought andexcessive precipitation index insurance system developed by EARS. The project startedin 2009 and was co-funded by the Netherlands Ministry of Foreign Affairs as acontribution to the UN Millennium goals. FESA has been successful in developingand providing low cost drought and excessive precipitation insurance in Senegal,Mali, Burkina Faso, Benin, Kenya, Tanzania, Rwanda, Uganda, Malawi, Mozambiqueand Botswana. The number of insured farmers is expected to grow to one millionduring the next three to five years.


The main challenges that crop insurance in Africa has been facing arerelated to scale and costs. Low costs are considered mandatory and would beenabled by using index insurance. But throughout Africa index insurance hasbeen frustrated by lack of data.  EARS providesa solution to this problem. The company, specialized in satellite data forclimate, water and food, has processed 32 year of Meteosat data to evaporationand precipitation data fields that cover the entire African continent at 3 kmresolution. Based on these data, EARS designs index insurance solutions for anylocation in Africa.  Using its Meteosat receivingsystem, the company will also monitor the insurance index during the growingseason and calculate and report pay-out to the insurance stakeholders.


Reaching scale is not only a matter of having plenty data, but alsorequires adequate processing techniques. EARS developed a geo-informationapproach to meet this challenge. After choosing from a range of design optionsand specifying the corresponding input parameters, 32 year of index data fieldsare automatically processed to national or regional maps of burning costs orpure risk premium. These may then be averaged by administrative area, so as to minimizetransaction costs. In this way, national scale drought insurancehas been designed for livestock, maize and beans in Uganda.


The report FESA Micro-insurance:Crop insurance reaching every farmer in Africa has just been published andprovides an overview of the technology and piloting results.  The report is quite complete in addressing:the social role of agricultural insurance, the index insurance alternatives,the derivation and validation of Meteosat derived indices, the comparison ofevapotranspiration and precipitation data performance, the design of the indexinsurance and the results of a range of pilot projects in west, east andsouthern Africa. A study of the Agricultural Economic Institute of WageningenUniversity Research concludes that the new Meteosat derived index insurance products offer alow basis risk and unlimited scope for scaling up, being strong advantages overtraditional index insurance practice.

Download the final report here:

FESA Micro-insurance - Crop insurance reaching every farmer in Africa.pdf


FESAMicro-Insurance offers free drought insurance design

March 2013 - Aiming to serve allAfrican farmers, FESA Micro-insurance is growing fast. But, large scale cropinsurance puts special demands. Using automated insurance design and monitoringtools, EARS has developed a geo-information approach to crop insurance. Mappedinsurance designs can be provided for the entire region, thus allowing forunrestricted sales. This enhanced capability is also reflected in the offer todevelop proof-of-concept, free drought insurance design.  


FESA Micro-Insurance is a drought and excessiveprecipitation insurance system, developed by EARS Earth Environment MonitoringLtd, a remote sensing and climate services provider in Delft, the Netherlands.The FESA initiative started in 2009 with financial support of the Ministry ofForeign Affairs in this country. The aim is to develop crop micro-insurancereaching every farmer in Africa. Drought risk analysis is based on more than 30year of Meteosat relative evapotranspiration (RE) data. Scientific studies andFAO reports show RE to be proportional to crop growth. In this respect RE isconsidered a more suitable drought insurance index than precipitation.


2012 was a successful year. Drought insurancehas developed for a dozen of projects in Mali, Burkina Faso, Benin, Kenya,Tanzania, Rwanda, Mozambique and Malawi. These projects were carried out incooperation with PlaNet Guarantee and other micro-insurance partners. Thenumber of actually insured farmers reached 23 thousand. This number is expectedto double every year.


FESA drought insurance can be developed forevery location in Africa without the need to have weather stations around.Therefore, there is a high potential to grow. EARS is currently confronted withthe task to develop insurance for thousands of locations on the continent. Thechallenge has been addressed by developing more fully automated tools. This hasresulted in a geo-information approach, where drought risk and insurance designparameters such as strike, exit and premium, are mapped for an entire region.In this way there is maximum spatial coverage and no limitation to selling theinsurance product to farmers. This helps reaching a scale where crop droughtinsurance becomes financially sustainable and affordable to every farmer.


To demonstrate its enhanced capability, EARS isproviding free drought insurance design for up to ten locations to relevantstakeholders. Interested parties must explain their interest and specify crop,sowing/planting window, length of growing season, as well as the name anddecimal coordinates of the locations for which the insurance is to bedeveloped.


Maize burning costs for the East African Region

The map presents the average payout for an insured maize crop in the period 1982-2012 for the long rains/masika growing season . Payout is determined on the basis of the growing season relative evapotranspiration (RE). Local agriculture is taken to be adapted to the long term average (REa). In this example, payout is linear, starts at RE=0.95*REa and reaches 100% if RE=0.65*REa

Satellite key to affordable droughtinsurance

September 2012 - FESA Micro-insurance has developed drought and excessive precipitationinsurance using 30 year of Meteosat data. In 2012 the technology has reachedconsiderable scale, insuring potentially several hundred thousands of farmers. Amajor step towards affordable crop insurance, which will help African farmersto invest in better seed and fertilizer and in this way realize higher cropproduction and income.


Increased food production requiresAfrican farmers to invest in better seeds, fertilizer and pesticides. In thisway production and income may grow two or threefold. But most farmers don’thave the cash and need a loan for this purpose. MFI’s are reluctant to providesuch loans, as crop failure due to drought or excessive precipitation wouldmake redemption impossible. Micro-insurance is recognized as the key to thisproblem. It would enable African farmer to climb out of their poverty trap andstart an upward spiral of increased income, savings and further investments.     


As the cost of traditional insuranceis high, weather index insurance has been advocated as a solution. However, thenumber of weather stations in Africa is too low. Adding stations entails highcosts and would not provide the historical time series needed for proper risk analysis.


In 2009, EARS Earth EnvironmentMonitoring, a remote sensing company in the Netherlands, started FESAMicro-insurance with the aim to develop low cost, satellite based micro-insurance,reaching every farmer in Africa. To this end 30 year of Meteosat hourly imageswere processed to 10 daily Relative Evapotranspiration (RE) and Cold Cloud Duration(CCD) data fields. These data serve as insurance index of agricultural droughtand excessive precipitation, respectively. They cover the entire Africancontinent at a resolution of 3 km.


Since 2011 EARS is supporting insuranceprojects of PlaNet Guarantee, MicroEnsure, Syngenta Foundation and Cardano. Insuranceshave been developed for maize, wheat, rice, beans and cotton in Mali, BurkinaFaso, Benin, Kenya, Tanzania and Rwanda.  EARS is providing for the data collection,risk analysis, technical insurance development, index monitoring and pay-outreporting. These services are readily implemented by the insurer.


Today this new approach to cropinsurance has reached considerable scale. This is important so as  to keep overhead costs low. The project withpartner PlaNet Guarantee in West Africa, involves already 840 locations. Each locationmay cover a farming community. In this way several hundred thousands of farmerscan be insured. Yearly costs of data collection, index development and indexmonitoring would remain below 0.5 euro/farmer, a very small part of theinsurance premium.  Therefore, FESAmicro-insurance represents a major breakthrough towards affordable cropinsurance. Everywhere in Africa!


Meteosat derived relative evaptranspiration (RE)is used as insurance index of agricultural drought. RE is closely related toplant available water and crop growth.