Farming Faces Climate Reality

As Zambia joins the rest of the world in commemorating World Farmers’ Day, attention has once again turned to the central role farmers play in food security, rural livelihoods, and national economic stability — and the growing threats that climate change continues to pose to agricultural production.

Against this backdrop, Hollard International has called for stronger disaster risk financing systems and expanded agricultural insurance coverage, warning that the sustainability of Zambia’s farming sector will increasingly depend on how well it is protected against climate-related shocks.

Speaking on the evolving risk landscape, Choolwe Sianyinda, Chief Operating Officer at Hollard Zambia, said agricultural insurance is becoming an essential tool for protecting vulnerable farming communities facing increasingly unpredictable weather patterns and economic uncertainty.

He noted that Zambia’s agricultural sector has in recent years suffered severe climate disruptions, including what has been described as one of the worst droughts in living memory during the 2023/2024 farming season.

“Zambia’s agricultural sector has experienced significant climate-related disruptions in recent years, including what has been described as the country’s worst drought in living memory during the 2023/2024 farming season,” Sianyinda said.

Rising Role of Agricultural Insurance

Hollard Insurance Zambia Limited is part of a consortium of insurers providing agricultural insurance solutions to smallholder farmers under government-supported agricultural programmes. The consortium offers Hybrid Index Insurance products, which combine weather-index and area-yield cover to protect farmers against drought, floods, pests, and other production risks.

According to the consortium, the 2023/2024 farming season alone resulted in over US$45 million (approximately ZMW880 million) in claims payouts to affected farmers. Hollard’s net contribution exceeded US$1 million (about ZMW21 million).

Sianyinda said these payouts demonstrate the growing importance of risk financing mechanisms in stabilising rural economies increasingly exposed to climate shocks.

“Without a doubt, this highlights the growing role of disaster risk financing and agricultural insurance in stabilising rural economies increasingly exposed to climate shocks,” he said.

From Traditional Cover to Hybrid Solutions

The consortium noted that while traditional agricultural insurance products were previously separated into weather-index and area-yield models, climate variability has pushed the sector toward more integrated solutions.

Hybrid Index Insurance, they explained, is designed to reduce gaps in coverage and better reflect the realities faced by smallholder farmers.

“There has been growing need to close the gaps that each index poses to smallholder farmers. As such, the Hybrid product appears to be more aligned to the current challenges facing smallholder farmers,” Sianyinda said.

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Climate Volatility Reshaping Agriculture

Insurance data over the past five years, according to Hollard, shows increasingly unpredictable claim patterns driven by shifting climate conditions.

Some seasons record high claims due to drought, while others are driven by floods, pests, or diseases. In contrast, the 2024/2025 farming season saw significantly lower claims, with payouts falling below US$43,000 due to improved rainfall performance.

However, stakeholders caution that reduced claims in one season do not signal reduced risk, but rather highlight the volatility of Zambia’s agricultural environment.

Government-Backed Insurance Expansion

Zambia has recorded relatively stronger uptake of agricultural insurance compared to other regional markets, largely due to government-supported input programmes that bundle insurance with subsidised farming inputs.

Through this model, the government covers 50% of insurance premiums, while participating farmers pay the balance. This arrangement has enabled over one million smallholder farmers to access insurance cover under the consortium scheme.

The model has been credited with improving financial inclusion, raising awareness of risk protection, and strengthening resilience in rural communities.

However, despite this progress, insurance penetration remains limited. Out of an estimated three million smallholder farmers in Zambia, only about one million are currently insured.

Call for Broader Private Sector Participation

Sianyinda emphasised that expanding coverage will require stronger collaboration beyond government-led programmes, particularly through private sector partnerships, farmer aggregators, and digital distribution platforms.

He also noted that improving farmer incomes, financial literacy, and insurance awareness will be critical in driving wider adoption of agricultural insurance solutions.

“Furthermore, there is more work to be done to address persistent barriers including trust deficits, limited distribution infrastructure, technology constraints and inadequate meteorological data systems,” he said.

He added that timely claims settlements and improved customer education will remain central to building confidence in agricultural insurance among rural communities.

“As insurance awareness increases and claims payouts reach smallholder farmers during difficult farming seasons, more farmers will begin to explore insurance as an alternative risk mitigation measure,” he concluded.

Conclusion

As Zambia reflects on the role of farmers in sustaining the national economy, the message from insurers is clear: climate risk is no longer a distant threat but a present reality reshaping agricultural production.

The future of farming, stakeholders argue, will depend not only on productivity and input support, but also on the strength of financial protection systems that safeguard farmers when the rains fail or floods come.

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