By Kobus Stapelberg, head of the agri insurance division at King Price Insurance
Pre-Covid studies show that one in five South African households engages in agriculture, with 65% of these households relying on home-grown or -reared produce and livestock to meet the household food demand.
A 2020 study performed in Nyandeni Local Municipality shows that a single subsistence farmer feeds six people, on average. And, in the interim, these numbers have likely increased due to the economic impact of the pandemic in tandem with South Africa’s worsening unemployment rate.
The pressure of providing food security for their households aside, subsistence farmers face numerous challenges. Ranking high are limited funding, a lack of knowledge, insufficient water, and a shortage of equipment. They also lack support from government and other organisations aimed at improving agricultural practices. This is a gap that insurers could potentially fill.
King Price Insurance is intent on transforming the agri insurance landscape, and as part of a holistic approach, is determining best practice for supporting and protecting South Africa’s small and subsistence farmers down the line. We recognise the urgent need for tailor-made insurance products, combined with mentorship from experienced commercial farmers, and government interventions, to uplift this vital segment of the agricultural community.
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Current insurance models are aimed at large commercial farmers and, as such, do not address the needs of subsistence, small, or even medium-sized farms – but, given the size of the ‘small farmer’ segment, this needs to change. King Price sees the formation of a bare-bones product as the solution for smaller agri producers and farms with lower risks. As an example, Karoo-based sheep farmers don’t face a significant risk of fire and the agri industry-standard R30 million liability cover, with its related premium, is excessive and limits entry to insurance.
King Price is also looking at the communal nature of small-scale farming, whereby individual farmers within a community own single assets, like harvesters and irrigators, which are borrowed and lent out as necessary. In this instance, even the insurer’s industry-first asset insurance product, pay-as-you-farm, which tracks asset usage and provides an annual rebate based on usage patterns, doesn’t meet the need. In commercial farming, pay-as-you-farm helps farmers to save on their insurance premiums, lower their capital risk and maximise profits, and it’s this future-forward thinking that the insurer aims to bring to the subsistence farming sector.
However, insurance alone is not enough to grow the sector sustainably. Mentorship from experienced commercial farmers and support from government in the form of policy reform and financial initiatives, are essential for subsistence farmers to monetise their output and join the formal economy. By fostering these relationships, King Price aims to help subsistence farmers transition to more sustainable and productive farming practices.
King Price’s vision for South Africa’s small farmers is not just about insurance. It’s about investing in the future of South African agriculture. It’s about meeting the real needs of subsistence farmers, offering innovative products, and fostering mentorship and collaboration.
Supporting subsistence farming is crucial for ensuring food security and growing an agricultural sector that’s sustainable on both ends of the scale. We’re committed to developing solutions that will help smaller farmers thrive, ultimately contributing to nation building and food security for all.