Story by Tom Ngare | Consultant | East Africa Dairy Development
Photos courtesy of Heifer East Africa

East African dairy farmers who have opted for crossbred or exotic animals face the challenge of how easily the animals die due to hunger, disease or other factors, compared to hardy indigenous animals. The crossbreeds and exotics are often a liability, slowing down dairy production and limiting milk incomes, but farmers within Heifer International's East Africa Dairy Development (EADD) project and across Kenya can now benefit from a new, low-cost animal insurance.

In partnership with Syngenta Foundation and UAP insurance, EADD launched the insurance product in the Tanykina Dairy Plant in Kipkaren Nandi County in the North Rift of Kenya. With the newly introduced Kilimo Salama livestock insurance, 32 pioneer EADD farmers can hedge their dairy businesses from loss for only 117 Kenyan shillings (KES), or about $1.40, per month.

Farmers can buy a one-year coverage plan for 3.5 percent of the value of each animal. The unique package combines insurance with a required animal care package, which prevents farmers from losing cattle to common and preventable diseases from ticks, worms and malnutrition. A recent study in Zambia revealed that the implementation of a similar animal care insurance dramatically reduced annual mortality rates from 22 percent to 1.6 percent, thanks to a drop in preventable diseases and overall improved animal health.

Tanykina Dairy Cooperative plans to pre-finance premiums and deduct the amount owed from farmers' milk deliveries through their existing internal credit structure. The yearly cost of the premium for an average high-yielding cow valued at 40,000 KES, or about $460, is 1,400 KES, or about $16. A care package costs an average of 4,200 KES, or about $48, which is paid for in quarterly installments of about 1,050 KES, or about $12.

If an insured cow dies, the farmer calls the Kilimo Salama helpline and a call center agent dispatches a veterinarian to verify the cause of death. The insurance payout is sent by UAP Insurance Company to the cooperative's Financial Services Bank, which then deposits it into the farmer's bank account.

Lenah Jecpkoech Rop, a tall, energetic and athletic 50-year-old, is one of the 32 dairy farmers delighted to have the new insurance. She knows her cattle are covered, even if East Coast Fever strikes the region again. "If this happens again, God forbid, and my cow is affected, I will just dial UAP helpline for a replacement," she said.

Tanykina Dairy Plant Manager Jeremiah Ruto said the North Rift region was prone to many preventable diseases such as East Coast Fever, Foot and Mouth Disease and Milk Fever. Ruto confirmed the insurance was made available to farmers in the Kipkaren and Surungai areas, but would expand to serve all qualifying farmers by the end of 2013.

"This insurance product is a game changer in the dairy industry," Ruto said. "It will ensure that we sustain our milk collection at more than 30,000 kilos (about 66 pounds) per day, because farmers will no longer be drawn back for losing their best producing cows to accidental death."

Alex Kirui, country director for Heifer Kenya, said farmers within the EADD partnership own nearly 700,000 cows, worth an estimated $50 million. "Creating sustainable linkages with service providers such as insurance firms and other financial institutions is one of our major goals," Kirui said. "The dairy cow insurance, therefore, is an exciting development because it will help farmers protect their business against risks that threaten their livelihoods. We see tremendous potential for the coverage to reach over 125,000 farmers in 21 partner cooperatives in Kenya."

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Heifer International

Heifer International is a nonprofit, non-governmental organization working with communities to end hunger and poverty while caring for the Earth.