Agriculture plays a crucial role in Ethiopia’s economy, contributing to one-third of the GDP and providing livelihoods for 71% of the country’s population. However, the sector is highly vulnerable to climate change, with smallholder farmers facing increasing risks from droughts, floods, and erratic weather patterns that threaten crop yields, food security, and household incomes.
To address these challenges, the InsuResilience Solutions Fund (ISF) is supporting a consortium led by Pula, in partnership with the Ministry of Agriculture (MoA), and the Ethiopian Agricultural Transformation Initiative (ATI), to introduce an Area Yield Index Insurance (AYII). This insurance solution is embedded within Ethiopia’s Input Voucher System (IVS), ensuring that smallholder farmers receive financial protection against crop failures.
At the initial pilot stage AYII was rolled out in selected woredas in the Amhara region, covering 123,000 smallholder farmers. The insurance, priced at USD 6 per bag of fertilizer, provides payouts of up to 3,500 birr (USD 64) per bag in the event of yield losses caused by droughts, floods, pests, or diseases.
By integrating AYII within Ethiopia’s IVS, the initiative ensures seamless insurance enrolment, as farmers automatically receive coverage when purchasing fertilizer. This approach reduces barriers to financial protection and strengthens farmers’ ability to recover from climate shocks.
Looking ahead, the project aims to scale up coverage to 2,000,000 farmers across Oromia, Amhara, SNNP, and Tigray regions, safeguarding key crops such as teff, wheat, maize, and barley. By enhancing climate resilience and financial security, the initiative seeks to create a more stable and productive agricultural sector in Ethiopia.
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